US butter prices running out of steam?

Published 16 December 15

Since the middle of March, US prices have been higher than in the EU and Oceania and even increased when prices in these other regions were falling. By the beginning of December this gap resulted in US butter prices being twice as high, compared to similar product elsewhere.

One of the reasons highlighted for the gains was that McDonalds in the US switched from using margarine to butter in its products from October, as part of its turnaround plan in the US. This resulted in the company suddenly going to the market to purchase enough butter for all of its stores, putting pressure on overall butter stocks. In Europe, McDonalds has always used butter, meaning a similar switch will not happen in this region.

From 11 December, butter prices in the US declined significantly, from $6,400/tonne to $4,850/tonne, down 24%, during the week. The decline is attributed to recent reports from the US Department of Agriculture showing butter production and stocks increasing during October. This resulted in manufacturers opting to offer more product on the market as holiday demand winds down.

Despite the fall, US butter prices are still significantly higher than those in the EU and Oceania. However, the US import tariff of $2,050 per tonne means a European exporter would net back almost $300 per tonne less than if they sold into the domestic market in Europe.

US butter prices Dec 15