- Outbreaks of avian influenza have been confirmed in Bulgaria, and thousands of birds have been culled.
- In Europe, pressure on egg and egg powder prices is mounting.
- Butter prices are falling, and buyers are returning to the market ahead of fall.
- The new U.S.-EU trade agreement is shifting the balance of power in the food sector.
Here we go! Foodcom S.A. is launching a new series of market analyses and commentary. In each issue, we’ll serve up the most important trends and events in the food industry on a silver platter. First up are three topics that could significantly impact the market in the coming weeks: the outbreak of avian flu in Bulgaria, the return of buyers to the butter market, and the new trade framework between the U.S. and the EU.
Avian Influenza in Bulgaria
Three outbreaks of H5N1 avian influenza have been confirmed on poultry farms in the Rakovski region of Bulgaria. The infection was detected, among others, in flocks of ducks, and veterinary authorities have decided to cull approximately 28,000 birds. This is not the first case of the disease in Europe this year—outbreaks of avian influenza have also been reported in Germany, France, and the Netherlands. The disease not only causes losses for local farmers but also disrupts trade and puts additional pressure on the prices of animal-derived products.
“A shortage of egg powder—a product widely used in baking, confectionery, and the food industry—is already evident on the European market. Avian influenza is further reducing the supply of this raw material, which may lead to further price increases and difficulties in securing contracts. We are seeing that many manufacturers are beginning to seek alternative sources of supply, including outside Europe. “In the short term, this situation may put cost pressure on processing plants, and in the longer term, it may accelerate discussions about greater diversification of sources and reducing dependence on individual markets,” — emphasizes William Peberdy, International Commodity Trader at Foodcom S.A.
Butter Market
The summer stagnation in the butter market is coming to an end. Trading in Europe is gradually picking up, although prices are still trending downward. Prices have fallen below 7,000 euros per metric ton, reflecting ample supply and buyer caution. There is no shortage of inventory, and many processors remain reluctant to enter into long-term contracts.
At the same time, the price declines have prompted buyers to return to the market. Distributors and processors are taking advantage of current price levels to replenish their inventories before the market changes direction again. Butter, traditionally regarded as a barometer of the entire dairy sector’s health, is thus signaling that the industry is preparing for a more dynamic fall season.
“The declines in butter prices have encouraged buyers to purchase more actively. For many market participants, this is the time to secure supplies before the situation reverses again. The persistent downward pressure indicates that the market is saturated with product and that buyers are approaching long-term decisions with caution. However, it is worth remembering that the dairy fats segment can react sharply. Even a slight change in production or logistics is enough for prices to rebound quickly. “The coming weeks will be crucial for assessing whether the current price correction will take hold or whether we are in for another wave of volatility,” comments Tomasz Kosiński, Partner at Foodcom S.A.
New U.S.-EU Trade Framework
The United States and the European Union have announced a new trade agreement covering agri-food products. Under the agreement, U.S. dairy producers—including those of milk powder, butter, and cheese—will gain easier access to the European market. In return, the EU has agreed to additional tariffs on some of its goods exported to the U.S. Consumers in Europe may benefit from greater supply and more competitive prices, but European exporters will face a tougher challenge in maintaining their position in the U.S. market.
“This agreement is not market-neutral. A greater presence of American dairy products in Europe will mean stronger price competition, particularly in the mass-market segment, such as powdered milk and block cheese. In the short term, this may benefit consumers and importers, but for EU producers it means lower margins and the need to fight more aggressively for the domestic market.
On the other hand, the additional tariffs imposed by the U.S. will reduce the attractiveness of exports from Europe. This will likely redirect part of the EU’s supply to other markets, primarily Asia and North Africa, where demand is growing. “However, a greater concentration of exports in these directions will increase Europe’s dependence on emerging markets, and this carries the risk of instability and sharp price fluctuations,” — says Mateusz Augustyniak, Member of the Management Board at Foodcom S.A.
