US butter exports to Europe are declining again

In July, more than 4.300 tons of butterfat were sold to the EU. A monthly record for this year. By August, this volume had already more than halved to 1.986 tons. Official US data for subsequent months is not yet available. This is mainly due to the US government's shutdown of operations for more than six weeks starting in early October due to budget disputes. More figures will follow in early December. These are expected to show a further decline in US butter exports to Europe.

Up to and including August of this year, more than 10.350 tons of American butter were sold to the EU, primarily because American butter was, and still is, much cheaper than European butter. Imports of non-European butter—including from New Zealand—contributed significantly to the drop in butter prices observed in Europe starting in the summer. 

Normally, very little American butter enters the EU. This is for two reasons: the composition is different, and there are substantial tariff barriers. The EU import duty is usually so high that it's not worthwhile to import American butter into Europe. However, this duty can be circumvented by finding a company that exports a product in the same category. This allows volumes to be compared against each other, duty-free. In technical terms, this is known as "inward processing." 

Meanwhile, the largest importer of American butter is not Europe, but neighboring Canada. Through August, Canada imported 31.000 tons of butter, a third more than last year through August.