Rising butter prices bad news for bakers [World News]

Upcoming Christmas – a challenge in the face of rising prices

As bakers slowly prepare for Christmas, they acknowledge that the current state of the market does not favour them. High sugar and cocoa prices, coupled with rising butter prices, can pose quite a challenge for confectionery manufacturers. At the end of September, butter prices reached $8706 per metric tonne in Europe, an 83% increase on the previous year. Forecast butter prices in the US rose to $1.4 per kilogram, up 15% from last year. Large confectionery manufacturers are looking to secure butter stocks for the increased production over the festive period, but the price increase could be felt heavily by smaller companies.

Why are butter prices rising?

High demand, low stocks of the product and the prioritisation of cheese production by dairy manufacturers are mainly responsible for the increase in butter prices. From January 2023 to July 2024, butter production fell by 1.6%, while cheese production , which is in higher demand, increased by 3.2%. Dairy sector production is failing to keep pace with increased demand, and the market is further threatened by factors such as the spread of bluetongue and Epizootic Haemorrhagic Disease (EHD) in Western Europe. Avian influenza in US cows, on the other hand, has not significantly affected national milk production levels.

Last year, milk production declined in most parts of the world, including Europe, the US and New Zealand. Low milk procurement prices and high feed costs discouraged many dairy farmers. This year, milk production in Europe has increased slightly – by 0.7% over the last 1.5 years. Prices for dairy and butter are expected to decrease as a result of increased production, but this will certainly not happen before a few months. Prices are already falling slightly in Australia and New Zealand. Experts predict continued growth in the global dairy sector, with the market expected to grow by 7% per year until 2029.