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Butter exports weakening even with lower prices

A dairy economist says he doesn’t expect much of a surge for butter exports before the end of the year even with U.S. prices below the global market.

Nate Donnay with StoneX says the latest Global Dairy Trade auction results pushed New Zealand butter prices closer to that of the European Union, both of which are at a premium to the U.S.

“We should see better exports, it just doesn’t look like the exports are going to be strong enough to really turn the dial on the butter market from bearish to bullish.  We need to see some kind of change in the supply side.”

Donnay says major destinations including Saudi Arabia, Iran, and Morocco that bought when the U.S. saw record sales levels in 2013 aren’t buying today which he says could be a sign of declining economies and ongoing trade issues.

He says reduced butter exports are also an indicator of a weakening nonfat dry milk, skim milk powder market globally.

The USDA’s Foreign Ag Service is expecting strong demand from China to continue, saying consumer demand and requirements for the food processing industry will likely lead to increased imports of U.S. skim milk powder (SMP), cheese, and whey powder, following the implementation of Section 301 tariff exclusions.