Butter Prices 130% Higher
During the past year, international prices for butter cheese and whole milk powder have increased significantly. The most notable of these has been butter, which according to USDA Foreign Agricultural Service (FAS) figures has climbed from $2,650/ton for Oceania and the EU in April 2016 to a current mid-point price at about $6,100/ton, a whopping 130% increase.
This increase is a classic supply-demand scenario: world supplies are tight and consumers are realizing that fat isn’t so bad after all.
An FAS report says that butter prices are unlikely to change in the near future based on current shipments. Exports from the top five major exporters—New Zealand, the EU, Belarus, Australia and the U.S.—are lagging about 17% behind last year’s pace as of April 2017. The EU alone is down 28%, or about 25,000 tons. For perspective, the FAS report says that in the period between 2012 and 2016 exports of butter from these five suppliers grew at an annual rate of about 4%.
Dairy farmers will appreciate better milk prices driven by the higher butter prices, but that will likely encourage more production. More butter means more byproducts, like skim milk powder. More powder will add to supplies of that product and likely limit any significant price recovery.