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US butter prices are set to ease in Q3 2022

July 6, 2022

1 mins read

US butter prices remained firm during Q2 2022, reaching multi-year highs in June 2022. The average price of US butter in the Apr-Jun ‘22 quarter surged to USD 6,008/MT, up 9% quarter-on-quarter, attributed to subdued butter production in May and tight inventories. The May production decline brought total US butter production to 427,000 tonnes during the year to date, down 3.5% year-on-year, while US butter inventories grew seasonally month-on-month but were relatively depleted at the end of May.

On the demand side, US butter is more price-competitive than butter from most of the other butter-producing countries’ international markets. Thus, US butter exports had significant growth during the first four months of 2022, eroding already limited domestic supplies. However, with elevated butter prices, domestic demand has started to subside. Consumers have already reacted to rising inflation in the food and beverage sector, including dairy, resulting in reduced butter consumption. At the beginning of the year, the USDA forecasted a domestic demand growth of 1.7% in 2022, but this may need to be revised as an economic recession could commence in Q4 2022, according to some economists’ predictions, further driving down butter consumption.

Consequently, Mintec predicts that the average price of US butter is expected to decrease during Q3 2022, based on lower domestic demand from the foodservice and retail sectors.

Topics: Dairy & Eggs
Jose Saiz
Jose Saiz

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