In the eight-week period to 10 June 2020, Mintec US butter prices increased by 63% to USD 4,219/MT. However butter prices fell by 6% between 10th June and 24th June to USD 3,951/MT, following an eight-week price run-up to that point.
The fall in price may be attributed to a surge in COVID-19 cases in June 2020, which has forced closures of foodservices across the US. On 7th July, over 60,000 new COVID-19 cases were reported in the US, shattering the previous highest record of 55,200 cases on 2nd July. The subsequent drop in butter price is likely linked to the sudden closure of foodservices, which accounted for almost half of butter consumption before the pandemic.
The United States department of Agriculture (USDA) introduced government assistance via the Coronavirus Food Assistance Program (CFAP) in May 2020. This relief package, has seen the USDA purchase USD 68 million worth of dairy products to mitigate the impact of the pandemic on dairy farmers. While this initiative will remain price supportive to contain excess supply, it may be short-lived if a second lockdown is enforced, as funding may run out in September 2020.
With several states across the US announcing new restrictions, in response to recent spikes COVID-19 cases, this has resulted in the closures of foodservices and hospitality sector for a second time. The possibility of future localised lockdown restrictions being imposed, could push Mintec US butter prices lower over the next few months.