‘A butter bubble is potentially around the corner’

Driven by consumer demand, European butter prices have surged to reach almost €6,500/t in recent days.

Figures from the European Commission’s Milk Market Observatory (MMO) show that butter prices stood at €6,470/t on September 20 – 74% higher than the corresponding period in 2016.

The price has almost risen constantly since May 2016, when it made in the region of €2,500/t. Between then and now, prices have improved by nearly 160%.

Speaking to AgriLand on the record butter prices currently being witnessed, ICMSA (Irish Creamery Milk Suppliers Association) President John Comer said: “A butter bubble is potentially around the corner.

Butter prices have reached $7,000/t. Consumers haven’t rejected the product at that price up until now. However, there seems to be some evidence to suggest that’s just about to happen.

Comer added that powder prices need to rise to compensate for any potential decline in butter prices.

“There doesn’t seem to be any evidence of that happening currently. Even at the latest GDT auction, powder prices were down slightly and butter was back up again.”

Image source: Milk Market Observatory

In terms of what it means to the farmgate milk price, he said: “I think there is going to be another 1-1.5c/L [milk price increase] and then it will plateau at that.”

Comer also touched on some positives in the dairy market, saying: “Consumer resilience to the higher prices that we are currently facing is very good.

“The nutritional value of the product we produce has been underpinned by nutritionists and everybody is incorporating dairy into their daily diet across the globe.”

Second consecutive price increase at GDT auction

The price index at the latest Global Dairy Trade (GDT) auction has reported its second consecutive increase, rising by 0.9%.

On September 5, the index rose by 0.3%. This followed on from decreases of 0.4% and 1.6% at the two GDT events in the month of August.

At the latest auction held on September 19, the price index for skimmed milk powder (SMP) fell by 1.2%. On the other hand, whole milk powder (WMP) climbed by 0.6%. There was no butter milk powder (BMP) offered at that event.

The cheddar index fell by 1.9%, while an increase of 1.2% was recorded in the butter index.

Key Results:

  • AMF index up 5.3%, average price US$6,764/MT;
  • Butter index up 1.2%, average price US$6,026/MT;
  • Ched index down 1.9%, average price US$4,032/MT;
  • LAC index down 3.8%, average price US$759/MT;
  • RenCas…

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