In view of the more than robust market parameters and spot market prices at an extremely high level in the past weeks and months, it is no longer a big surprise: It was really only a question of the amount and duration of the new butter contract between dairies and food retailers. With the start of the new contract next week, the dairies’ sales prices for German butter (retail brands) will increase abruptly and dramatically by an average of about €1.60 per kg.
The basis for the current development, which can almost be described as a price explosion in view of the counter-pressure from the food retail trade, was the recently extremely stable framework data of the butter and fat market: below-average milk supply and significantly lower fat contents for months. This led to raw milk being traded on the spot market at prices of up to 50c per kilogramme. The prices for bulk industrial cream also only knew the way up in the past weeks. Most recently they were not far from the limit of 7c per fat unit (10 g). The early indicator block butter had also risen significantly in the past weeks and was quoted above €5 per kg.
In contrast to the “old days”, when the so-called “Aldi level” was the guideline for all other contracts and traders, there are probably also currently contracts with different terms and different price levels. Thus, terms of one month at the price level of €5.90 are mentioned as well as (more frequently) €5.65 for three months. This dispersion in the agreed sales prices was also evident in the previous contract, which was valid from September to the end of October. The relevant quantities for the discount goods were traded between €4.14 and €4.21 per kg of butter.
photo: Valio
