Holiday orders are picking up, spurred by recent declining wholesale butter prices, according to USDA’s Dairy Market News, but the market tone still has some uncertainty as to where prices will stabilize. Central production rates vary, but are generally higher as manufacturers look to fill seasonally increasing sales.
Interest from both retail and food service accounts strengthened. U.S. prices are converging to competing global markets.
Cream demand is weak as churn operators work current inventories lower. The situation is similar for bulk butter for those who can microfix (cut large frozen blocks into consumer ready blocks or sticks) are working at reducing supplies while decreasing spot load purchases. Manufacturers’ supplies range from light to moderate. Some buyers note a few trucking challenges for large volume orders.
Butter price weakness and plenty of cream overhang Western butter markets.
Managing the entire situation is challenging for manufacturers. Some butter manufacturers receiving cream flowing from contracted producer milk, are having to make butter for bulk and retail purposes rather than attempt to sell cream under current conditions. Other butter manufacturers who typically purchase cream are less interested in making butter. Some manufacturers with no constant cream supply are not interested in purchasing cream at anywhere near current prices, except to make butter for already contracted orders. Some contract buyers of cream are even pushing it back to plants, reducing contracted volume accepted.
While the foregoing comments reflect the majority of information received, occasional pockets of production note cream being tighter. This is the minority experience. While most butter manufacturers have experienced customers strategizing purchase timing, continuing a hand-to-mouth strategy, there are some indications, as the calendar moves toward November, of occasional buyers beginning to ease into buying beyond immediate needs.
Source: DairyBusiness Update