US butter prices have remained firm in the run-up to Christmas. The November average price significantly increased by 9.6% m-o-m to reach USD 4.35/Kg. Overall, the US butter prices have strengthened since November 2020, up by 42.2%, due to the combination of lower butter supplies, in addition to higher demand, both domestically and internationally.
US butter production declined by 1.6% m-o-m in October 2021, bringing the butter production for the January-October 2021 period to 1.75 billion pounds, down by 2.2% y-o-y. Butter production has been trending downward since July 2021, as expected, with downtime due to difficulties finding cream for butter making and labour shortages. Milk processors are channelling more milk to cheese vats, driven by the additional capacity that has recently come online.
Moreover, US demand outpaced supply with the US butter inventories falling for the fourth consecutive month in October. There were 127,680 tonnes in cold storage at the end of October 2021, over 20,0000 tonnes less m-o-m, and a decline of 6.1% y-o-y. However, butter inventories remain ample and are available for near term commitments. In addition, the US butter domestic consumption is forecast to grow by 1.7% y-o-y in 2022, driven by foodservice sales, which held up relatively well during the Delta variant wave, while retail demand was weaker. Also, ample US butter inventories and a prolonged period of US butter price competitiveness in the global markets have boosted US butter export sales, which skyrocketed by 124% y-o-y during January-August 2021 period.