European butter prices drifted higher again this week as stocks remain very tight, although the rate of increase is beginning to decelerate as the price ceiling nears.
European butter prices drifted higher again this week as stocks remain very tight, although the rate of increase is beginning to decelerate as the price ceiling nears.
Butter prices have risen to highs of €5,650/t in the last week, but it remains possible we could see €6,000/t by the third quarter of this year.
However, affordability is now becoming a major concern should market prices continue on this trajectory. The price ceiling for many buyers is very close now and many will walk away in favour of fat substitutes unless some heat is taken out of the market.
Additional butter supplies should come on stream in the coming months as milk production catches up.
In New Zealand, this week’s latest GDT auction was steady, as average prices increased a marginal 0.6% to just under $3,400/t. Whole milk powder (WMP) ended its three-month rally to record a 3% decline in price close to $3,150/t.
The big movers at this week’s GDT auction were skimmed milk powder (SMP) and cheddar.
The average selling price of SMP was up 8% to just below $2,160/t, while cheddar prices jumped a massive 15% to move close to $4,300/t.
Butter traded on the GDT extended its long-running price rally since July last year, as prices increased a further 3% to reach $5,630/t. This is by far the highest GDT butter prices have been in well over five years and means butter is now trading at more than double the price it was this time last year on the GDT.
Dairy markets
EU decision a boost for dairy market recovery
Australian co-op's milk price forecast improves but remains 'below expectation'
This is a subscriber-only article
SHARING OPTIONS: