“Butter is a Johnny-come-lately,” FC Stone’s Bill Brooks reported on Monday’s DairyLine. “We had the strong powder prices last year and that spread over into the cheese market and it took a long time for butter to get into this mode here.”
Because of the rapid drop in inventories last fall going into the holiday season, both from a domestic and international demand standpoint, buyers became nervous. They went ahead and bought the product even though they probably won’t use it until later this year.
When all the economic activity was taking place and driving other prices up, butter is the one commodity that has not been able to set a new record.
The butter price hit $2.81 in September of 1998, back when the CME traded it only on Fridays. So, we’re 31 cents away from the record price and given some of the gains we’ve seen the last couple weeks, Brooks said it is possible we could get up to that level.
The U.S. is the most expensive place to buy butter at the wholesale level. The European price (80% equivalent) recently topped $2.11 and Oceania is down to $1.75. Brooks reported that butterfat was moving out of Europe and on its way to the U.S. , but at the same time the U.S. continues to fill export orders.
So we could see a situation on the East Coast where you have a ship laden with U.S. butter heading out and passing a ship coming in with butter from Europe.