Butter price movement has been spectacular over the last two and a half months. The butter price was $2.62 on August 30th and increased by 88 1/2 cents, hitting a record high of $3.50 1/4 on October 6th. The price then dropped 90 1/4 cents to $2.60 on November 10th. We believed the end of 2021 and most of 2022 would be a crazy ride for butter, but this year has surpassed that time. Even though prices gained $1.24 1/2 from late 2021 to early 2022, the market then chopped about for a while before continuing its uptrend, finally hitting a peak on October 6, 2022, before falling again.
Nothing like the current price movement has occurred in history. The last time prices decreased this quickly was in late 2014, when the price plummeted $1.29 from September 25th to October 28th. But we’ve never seen it fluctuate so rapidly in such a short period of time.
The insane component of the butter movement was not a fear of a butter scarcity this year, as it was in 2022. Exports fell more in contrast to 2021 and early 2022. Butter exports reached 2,294 metric tons in September, a 46.4% decrease from September 2022. To make things worse, exports in September 2022 were 35.5% lower than in September 2021.
September exports were the lowest since 2020, while the monthly amount of butter exports was the lowest since November 2020.
Domestic butter demand surged as the second half of this year progressed, increasing purchasers’ willingness to acquire stock ahead of time. Butter output has also slowed, while cream supplies have tightened and churning has been decreased. As bidders got more aggressive, the expectation of increased prices became a self-fulfilling prophesy. Once the purchasing frenzy was over, sellers were more aggressive in order to shift high-priced supplies as fast as possible, resulting in a downward leap-frog effect. It is unclear how far prices will fall, but it is yet another typical example of a market that always falls faster than it rises.
Not only are we dealing with decreased milk costs and decreasing demand for fluid milk consumption, but schools are also facing a milk carton scarcity that might last many weeks or months. According to Pactiv Evergreen, the main maker of milk cartons in North America, demand for half-pint milk cartons is much more than predicted. The immediate consequences will be felt in New York, Pennsylvania, California, and Washington. School authorities are trying to find alternatives to cartons or restricting milk options. Not only are schools at risk, but so are hospitals, nursing homes, and jails. I’m not sure how demand for half-pint milk cartons can be much greater than predicted. According to fluid milk sales figures, there hasn’t been an increase in demand from schools or other organizations. It seems that this primary corporation was unable to provide its consumers, forcing them to turn to other companies for supplies or alternatives. It is undeniably an intriguing market.
