Consumers all over the world have been craving more and more butter. That can most easily be quantified by one simple statistic – world butter prices have risen for 13 straight months.
That’s according to international data tracked by the FAO, known more formally as the Food and Agriculture Organization. Key drivers for rising butter pieces have been strong demand, limited inventories, and seasonally low milk production in Western Europe, reported the FAO.
While the U.S. still has some historically strong butter prices, they are down from the lofty $3 per pound figures that prevailed earlier this year and during the fourth quarter of both 2022 and 2023. The reason U.S. butter prices have dropped down to the $2.55 per pound range this November doesn’t have anything to do with demand . . . it’s largely based on stepped up production. U.S. butter manufacturers churned out record monthly volumes for August and September. In August, butter production grew 14.5% over August 2023. September was much the same, with output climbing 11.3% over the prior September.
The U.S. is third in world prices
At a value near $2.55 per pound, U.S. butter prices remain strong, but they are not as strong as other major dairy players. If price perspective holds, the U.S. could begin to export product even though it largely produces butter containing 80% butterfat when compared to 82% butterfat butter produced in the European Union and New Zealand.
At New Zealand’s most recent Global Dairy Trade (GDT) auction on November 19, butter fetched $3.18 per pound. While that’s 60 cents higher than the U.S. price, there’s an even bigger spread between North America and Europe. The lowest cost butter among Europe’s major players traded near $3.65 per pound in France. That’s a $1.10 premium and speaks volumes to just how tight butter supplies have gotten globally as we head into the holiday season. In Germany, where milk supplies have tightened up due to a bluetongue outbreak, butter moved higher to $3.93 per pound. Overall, top butter prices in major European countries are 40% to 60% higher than last year. Meanwhile New Zealand prices are 40% higher than one year ago. On the flip side, U.S. butter prices are down nearly 20% when compared to just one year ago thanks to more U.S. butter being churned out versus 2023.
