Higher Export Price for Butter Hits Local Retail Price
The export price of butter reached a new high in the September 2017 quarter, to be up 8.8 percent from the June 2017
quarter, Stats NZ said today.
Export butter prices increased 75 percent in the year ended September 2017, and these gains were closely tracked in
domestic butter prices in New Zealand shops.
Whole milk powder prices were down 2.0 percent and cheese fell 1.7 percent in the September 2017 quarter. Dairy product
export prices as a whole increased 38 percent in the September 2017 year, despite dipping 0.9 percent in the September
2017 quarter.
The recent increase in butter export prices was influenced by high global demand and a drop in European milk supply.
"Lower international supply was caused partly by lower farm-gate milk prices in Europe, which led to reduced herd sizes.
At the same time we’ve seen a consumer swing towards butter and away from products like margarine,” prices senior
manager Jason Attewell said.
“Globally, consumers often place a premium on New Zealand butter. That demand has pushed the export price to new
heights.
International market prices for butter typically flow through to the supermarket cost for New Zealand consumers.
In the September 2017 quarter, the price of a 500g block of butter (as measured by the consumers price index) was up 9.7
percent from the June 2017 quarter.
“Kiwi food shoppers have felt the impact of record world butter prices. The average price of the cheapest available
block of butter in supermarkets reached a record $5.55 in September, up 60 percent from September 2016,” Mr Attewell
said. “Prices have continued to climb into November, hitting $5.74 a block.”
“In recent years, export and domestic price changes for butter have tracked very closely, which reflects the fact that
New Zealand consumers are ‘price takers’ on the international market despite New Zealand being a major butter producer.”
Other indicators, such as the fortnightly Global Dairy Trade (GDT) auction price for butter, also increased during the September 2017 quarter– the auction price reached a five-year high of US$6,026 a metric
tonne on 19 September 2017.
However, since September GDT prices have fallen. The auction price on 5 December 2017 was down 24 percent to US$4,575 a
metric tonne. Typically, there has been a lag of 4–6 months between GDT price movements and the prices New Zealand
consumers see on supermarket shelves.
Local and international production have both increased and milk supply in Europe has begun to expand.
“Fears of the butter shortage, or #BeurreGate, continuing through to Christmas have abated,” Mr Attewell said.
“However, with the dry start to our summer it’s unclear how the price of butter will change in the near future.”
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