European butter quotations have fallen by more than 30% over the past four months, driven by both rising production and shifts in the global trade balance.

Butter prices have slumped on European commodity markets. The Dutch butter quotation is now at its lowest level in two years, according to figures from CLAL.

According to AgriWatch, the price decline is due to a combination of increased supply and changes in international trade. The United States has funneled more butter into the export market after having “fallen out with its largest markets, Mexico and Canada,” putting downward pressure on prices, Arla’s Head of Commodity Trading, Thomas Carstensen, said in a written comment to AgriWatch.

At the same time, European production has been lifted by rising milk volumes and higher fat content through the autumn. European prices, however, remain above global market levels, which is curbing exports from the EU, AgriWatch writes.

Global demand is described as stable, but butter prices have shown significant volatility in recent years. The reason is stable prices for skimmed milk powder, a by-product of butter production. When skimmed milk powder prices do not fluctuate, market adjustments instead hit butter prices.

Source: AgriWatch

By Maja Løvstrup
Photo: Colourbox