US butter stocks decreasing, prices firming

Stocks of butter in storage in the US have decreased during the past month and prices are firmer.  Butter stocks dropped 12% during September to end the month with 233 million pounds (105,800 tonnes) in storage.  Volumes remain 19% higher than they were a year ago, but the drop in storage volumes is encouraging for prices. At present butter is trading within the US market at a heavy discount to global prices.  This is encouraging the US to export more butter.  The US has been aggressively marketing butter into countries such as Morocco and Turkey where they are gaining market share at the expense of New Zealand and the EU.  Saudi Arabia and Iran have been the largest markets for US butter this year. Butter exports from the US are up 43% year-on-year (Jan – Aug) to 47,700 tonnes.  30% of the butter exported from the US headed to Saudi Arabia (14,680 tonnes) and a further 16% (7,650 tonnes) was exported to Iran.  Meanwhile the other main countries the US has exported butter to this year are: Morocco (4,300 tonne), Egypt (3,750 tonne), South Korea (2,500 tonne) and Turkey (2,400 tonne). Co-operatives Working Together (CWT) has aided the export of nearly 37,000 tonnes of butter this year, meaning the majority of the butter being exported out the US is being subsidised The U.S. Dairy Export Council (USDEC) projects that by the end of this year the value of US dairy exports will total $6.5 billion, up more than 25 percent from 2012. The reduction in butter stocks has been reflected in prices being paid for butter.  For the past couple of months the NASS weekly price for butter has been tracking upwards, although a fall was recorded this week.