Butter prices keep bouncing up and down

Where prices rise sharply one week, profits often go up in smoke the next week. Sometimes there are even quite large fluctuations - of a few hundred euros per tonne - per day. This volatile game is liked by dairy traders, who often profit from erratic market movements. The market has been showing this pattern since the beginning of this year, in contrast to cheese and milk powder, which are moving much more stably. 

Tepid demand, tight supplies
The butter market is between two fires. On the one hand, demand is tepid, as is the case for many other dairy products. On the other hand, butter stocks are low, partly because cheese has long provided a better valorisation of milk. The tight stocks mean that the market can rise explosively, because buyers believe they have to take action when the market picks up again. Many parties are covered briefly. Relatively few contracts are still on the books for the second half of this year, producers indicate. 

It is striking that American butter stocks are showing an upward trend and have been clearly above the 2023 level since March, although the butter market is mainly a European affair. 

Limited bandwidth
Historically, butter quotations are at a high level at just €6.000 per tonne. The upside potential therefore appears to be limited. On the other hand, the floor under prices also seems quite strong due to tight inventories. A likely scenario is that butter prices will remain fairly volatile in the coming weeks, albeit within a fairly limited range.