The US butter price in May 2020 averaged USD 3,289/MT, which was 36% lower than the price for the same period in each of the last two years. However, in the eight-week period to 10 June 2020, Mintec US butter prices increased by 63% to USD 4,219/MT, in line with stronger retail demand, as the food service sector introduced a phased return across the US. Restaurants accounted for approximately 45% of pre-pandemic butter consumption, leaving a substantial demand gap, as the sector ground to a halt. This was partially offset through higher retail sales, which increased by 20% over the same period.
Furthermore, the US government introduced the “USDA Dairy Box” initiative, which supported farmers impacted by the slowdown in foodservice demand. To date, the USDA has purchased $317 million of dairy products since 15 May 2020, and is expected to maintain the program until 30 June 2020. The programme has helped to partially alleviate some supply pressure caused by excess stocks.
The Mintec US butter price is expected to gradually increase, as lockdown measures ease. The US government assistance and depletion of pipeline stocks amongst some food service distributors should also prove price-supportive in the short-term.