Butter market conditions remain unstable, as a recent price increase has failed to establish a sustained upward trend. On the European market — a key destination for Ukrainian exporters — quotations have dropped noticeably in recent weeks, returning to lower levels, ProAgro Group reports.

Experts attribute this trend to excess supply driven by strong production, as well as spillover effects from the skimmed milk powder market, where prices remain high. As a result, inventories are accumulating, adding further pressure on prices.

With no positive signals from the European market, industry participants expect further price adjustments both in export markets and domestically. This outlook is supported by rising production and growing unsold stocks.

Market estimates indicate that butter production in Ukraine is increasing compared to last year, while export activity is not showing similar growth. High skimmed milk powder prices remain an additional incentive for producers, partially offsetting losses from declining butter prices.

Supply is expected to continue growing in the near term, which could intensify downward pressure on prices and maintain market volatility.

Earlier reports indicated that dairy market conditions improved slightly in spring, but export margins remain significantly weaker than a year ago. In particular, revenues in the “butter + skimmed milk powder” segment are currently lower than last year.

Source: INFAGRO