Butter prices across Europe have climbed to a record high, with wholesale averages reaching €439 per 100kg last week.
The European Commission’s data on butter prices goes back to 2001.
Prices crossed the threshold of €400/100kg last October, which was the first time that level had been reached since 2013. After declining from their previous high in January, prices rallied to stop just short of €440 at the end of last week.
According to Sean O’Leary, Chairman of the IFA Dairy Committee, there’s no shortage of butter – the record price levels are a sign that demand for butter is being buoyed from the consumer side.
“It’s part of the continued increase in demand for butter fat – that fact in itself is positive. It’s basically a change in mindset. You do have that demand worldwide,” he added.
“Your middle-class consumer is now consuming more butter fat. Butter is regarded once again as being a healthy product with positive attributes.
There’s a lot of emphasis back now on home cooking and butter is benefiting from all of that. It’s not due to supply issues – there’s more and more of it being supplied – but demand is increasing, and that’s positive. It’s probably a more permanent situation.
“Even the traditional oil-based spreads, margarine-based spreads – most of those are also including some level of butter in there and trying to ride on the back of the popularity of butter.”
But with the divergence in price levels, the high butter prices are being weighed against low prices for other dairy products.
“When you contrast it with skim on the other side which has been operating on the lower side all along; it’s a balance between the two. One is counteracting the other which is positive,” O’Leary said.
“I suppose the challenge in it is to try and get those prices back from the marketplace in terms of selling product.
If we did see it matched by skimmed prices coming up as well that obviously would be more positive. Cheese is holding up reasonably well, but it’s a contrast between skim and butter.
But there’s no butter without skimmed milk, and the by-product of a butter boom could be a flood of skimmed milk.
“Whole milk powder is more made to order, whereas with skim and butter obviously if you make one you’ve [got] to make the other,” O’Leary said.
He says butter prices have done better than expected, and is hopeful prices will stick at this level.
“It’s positive, and the hope is that it would remain permanent. They’re at record levels. People said a number of months ago they wouldn’t go any higher but they have.
“Obviously for people selling it’s a problem to recoup that from the market but from a farming perspective it is positive – and hopefully sustainable,” he added.