Since June 2018, Mintec prices for EU butter have declined during 12 consecutive months. The average June 2019 price is down 4% m-o-m and currently stands 31% below the price one year ago. Underwhelming purchasing activity and high inventories have depressed prices.
EU butter prices had previously held a premium over both US and Oceania butter prices at the start of the year, but through April and May prices converged, and EU butter fell below competitor prices on international markets.
The slide in EU butter prices has been driven by adequate inventories of butter in cold storage and falling demand. Buyers are currently well stocked, and the unseasonably cool weather through late spring dampened consumer demand. Butter demand is currently weak due to the summer holiday season. A typical seasonal occurrence, the demand for butter drops off during the summer as people are on vacation.
On the other hand, milk production is set to slow as the peak production season passes, which will contribute to declining butter production. However, with butter supplies well stocked in the EU, all immediate demand is likely to be covered in Q3.