After the market weakness and a couple of false positives of the last couple of years, it’s tempting to disregard recent positive signs from butter markets, but perhaps buyers are starting to react to supply slowdowns in Europe and globally.

The most recent Eurex indices put a value of €2798 for butter, up over €370 per tonne since it’s reported weakest weak point in April (€2423), with SMP not performing as well but still quoted at €1690, up about €60 over the same period. In reality, SMP is still being sold into intervention, or at prices below intervention levels, and there is a huge volume of stock which needs to be eaten into before the market regains buoyancy.

The butter picture seems reasonably positive, with traders reporting strong stock movement, and the good summer (thus far) ensuring strong cream demand, and the affordability and newly re-established health credentials of butter allowing it to make inroads on margarines.

This week’s European Milk Market Observatory report suggests strong growth in Dutch spot milk prices, currently trading at 23c per litre. This is still a weak price, but it’s well up from the 17c on offer in April.

The May Ornua index has continued to show falls (from 81.4 to 80.8) and while continued weakness is worrying, it only fell by 0.6 when there had, perhaps been an expectation that it might have fallen further.

Meanwhile, the GDT auctions have now had two modest (2.6% and 3.4%) increases, now valuing butter at about €2466 and SMP at about €1667. This puts milk prices at about 19c for Irish constituents. The same calculation using European quotes values milk at 21c.

In the US, the All-Milk price continues to slide, falling to €15 per cwt for April.

By TJ Flanagan

Dairy Policy Executive