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Butter prices have gone down, but current prices may not last

The cost of butter has declined in stores.
The cost of butter has declined in stores. Source: (Postimees/Scanpix)

While last year's butter crisis saw a sharp increase in butter prices, costs have since fallen significantly. Although the cost of the raw material has dropped, producers warn that low butter prices may not last.

Last September, supply difficulties led to butter shortages in many grocery stores. By now, however, butter is no longer in short supply, and consumers in most stores may have also noticed a drop in the price thereof.

E-Piim board chairman Jaanus Murakas told ERR that butter prices have indeed come down, and producers can offer better deals as well.

"When the butter price rally took place worldwide and in Europe in the third and fourth quarter [of 2017], while nobody can predict market prices, it was speculated that the situation would likely settle down with Christmas," Murakas said. "The consumption of foodstuffs is always down at the beginning of the year; there is a lage consumption boom during the Christmas season, and then there is a down season. And so it has gone."

According to the chairman, prices began to go down after peaking in November, and Estonia, being such a small market, does not set its own prices; these are influenced by global trends. Whether prices will now remain low or consumers can expect a new crisis, however, remains to be seen.

"I can only say that markets are very vulnerable, prices are very volatile and depend on so many factors, and so price fluctuations are very rapid and drastic changes can occur very suddenly," Murakas said. "In other words, markets are very difficult to predict. Nobody can say here that I know precisely that there will be such prices for three or six months."

According to Estover CEO Hannes Prits, long-term trends indicate that demand for butter and butterfat is higher than average, which means that prices won't be dropping significantly anytime soon.

"At the same time, we can't talk about any kind of butter crisis anymore either," he added. "On the one hand, butter as a healthy fat is once again gaining popularity; on the other, fat levels in raw milk worldwide remain low, and so, when it comes to butter, one cannot expect oversupply or intervention purchasing on the EU's part anytime soon."

Dairy producer Tere marketing manager Katrin Tamm agreed that the cost of milk has fallen somewhat on the global market, but it is difficult to make predictions about the future.

"Estonia is such a small player on the global market, we just need to adjust to what is going on on the global market," she said.

Prices may approach last year's records again

Kaimo Niitaru, category chief in the purchasing department of Prisma Peremarket, said that they have been able to adjust the sale price of butter because the purchase price of butterfat on the global market has stabilized and recently even fallen somewhat. Selver communications specialist Karl-Villiam Vaserk noted the same.

Rimi Eesti internal communication specialist Heleri Tamme likewise cited changes in the prices of raw materials as the reason behind the drop in prices, but she also stressed that it was not possible to forecast the stability of the current price trend.

"Anything can happen," Murakas summed up, adding that more milk is currently being produced in the EU, which means higher volumes, and so while prices may approach last year's record highs again, they are unlikely to exceed them.

Editor: Aili Vahtla

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