The Mintec US butter price has been rising through 2019, with prices on July 10th standing 6.8% higher y-o-y. Mintec prices for US butter now stand at a premium to alternative major dairy suppliers Australia, New Zealand and the EU.
Behind the rising prices is the contracting milk production in the US. Years of low milk prices in the US have caused dairy farmers to exit the market due to tight unmanageable margins. In Michigan, a top dairy producing state, 13.1% of dairy farmers exited the market last year. This is representative of wider trends across the US dairy industry and the contracting milk production has tightened milkfats available for butter manufacturing. Butter production between January and May this year is down 2.5% compared to the same period of last year.
As a result of the high domestic prices of butter, the US imported 8 million pounds of butter in April, this is a 50% rise in imports compared to April 2018. The high prices have deterred purchasing attention from overseas too, as US butter exports plummeted by 71% y-o-y in April. The appreciating US dollar has also exacerbated falling export demand, with the dollar gaining 2% against the euro by July since the start of the year.
For butter exports between January and May, 14,000 tonnes were shipped from the US. This is down 27.4% from the 20,000 tonnes exported during this period of last year.