After a price surge, global butter is dropping on the GDT as production ramps up and buyers pull back.
Global butter prices are starting to fall, a trend likely to continue as production begins to outpace demand. At the latest Global Dairy Trade (GDT) auction, the price for butter dropped by 2.5% to US$6,969 per metric tonne. This decline comes after a period of high prices, which had seen retail costs for a 500g block of butter surge by more than 50% in recent months. This softening market is a key indicator for analysts and manufacturers tracking the latest dairy economics.
The decline in butter price is part of a wider trend observed at the GDT auction. The GDT Index as a whole fell by 4.3%, primarily driven by a 5.3% drop in the price of whole milk powder (WMP), which is the most influential product on farmgate milk prices. The article notes that skim milk powder also saw a significant decrease, falling by 5.8%. This broad-based decline suggests that the global dairy market is entering a new phase of supply-side recovery.
The increase in global production is a major factor behind the price softness. The article mentions that US milk production was up 3.5% in July due to larger herds and improved yields. While the European Union’s output saw a slight dip, countries like Ireland recorded their highest June milk collections in 50 years due to favorable pasture growth. This influx of supply is a clear signal to buyers that they can afford to be less aggressive with their purchasing, leading to lower prices.
A key point from the article is the behavior of buyers at the auction. According to HighGround Dairy analyst Stu Davison, buyers from every region except China stepped back massively. This indicates that buyers are well aware that global supply is increasing, and they are holding back on purchases in anticipation of further price drops. The only bright spot was cheddar, which saw a surprising 3.6% increase in price at the auction.
For producers and processors, this trend puts new pressure on profitability. While the latest Fonterra farmgate milk price remained steady, a continued decline in WMP could start to impact the current season’s price forecast. The article highlights that despite the early season’s strong production in New Zealand, the overall market is now facing the challenge of strong supply meeting a more cautious demand, reinforcing the volatile nature of agribusiness commodities.
Source: BusinessDesk, “Global butter price begins to soften as production ramps up”
You can now read the most important #news on #eDairyNews #Whatsapp channels!!!
🇺🇸 eDairy News INGLÊS: https://whatsapp.com/channel/0029VaKsjzGDTkJyIN6hcP1K
