Butter prices in Europe have skyrocketed, reaching an all-time high of €8000/mt this week. After cream cream reached its highest point two weeks back, butter prices have followed suit, reflecting renewed demand in the European dairy market. Additionally, Skimmed Milk Powder (SMP) prices are also nearing the top end of their 2023 and 2024 price ranges.
This raises an important question for producers and traders: is now the time to lock in a favorable price, or are we about to break resistance levels and enter new, uncharted market territory for butter and SMP?
The current European dairy market is clearly supply-driven, with demand remaining robust for several months. The short-term market direction seems to depend largely on supply factors, as there’s a notable scarcity of butter, milk powders, and whey powders available for immediate trade.
With limited supply and the holiday season fast approaching, market conditions are primed for a continued price increase. Vesper’s AI-driven price forecast also suggests that butter prices are likely to continue rising in the near future, reinforcing the upward trajectory in the dairy sector, see figure below.
All these commodities are currently produced with expensive milk, which pulls up the production costs significantly, raising the bottom of the market very quickly.
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