Supply chain panic as global butter prices hit record high

Butter prices on spot commodity markets have reached record highs in recent weeks causing panic in the supply chain.

In the last 12 months spot butter prices have jumped 160% from the Intervention floor with 70% of this increase occurring in the last two months to reach record levels of c. €6,000/t.

The previous record was €4,100/t for two months in late 2007. Most of the price increase can be explained by the low unsustainable starting base of Intervention, supply reductions and strong demand. The remainder of the price increase can be attributed to panic buying by large food ingredient customers who were operating with low stocks because they budgeted to buy butter at a “fair value” price of €3,600/t in late 2016.