Record butter prices expected

ASB senior rural economist Nathan Penny. Photo / Supplied

Households, restaurants and bakeries be warned, butter prices are expected to rise well above last year's records, already sitting just 5% below the highs set last September.

ASB senior rural economist Nathan Penny said butter prices were already well up on the same period a year ago, and the seasonal lull in New Zealand milk production was still to come.

"We anticipate butter prices will shatter last year's records over coming months," Mr Penny said.

In October last year, butter prices were up more than 60% against a year earlier. By November, one Dunedin supermarket's cheapest 500g block cost $5.90 and there were reports of $8 blocks in other Otago towns.

A year ago, a metric tonne of butter was selling for less than $US5000 ($NZ6800) in global markets. At present it is selling for well over $US5500 ($NZ7500).

Mr Penny said it was no coincidence that butter prices peaked last year during the period when New Zealand production and exports were at their weakest: winter and early spring.
Global dairy trade butter prices peaked at $US6000 in late-July and late-October last year.

New Zealand was the world's leading butter exporter, sending out more than one and a half times the combined output of the European Union, US, Australia and Argentina, Mr Penny said.

He said the "squeeze" was back on global butter prices, which had so far lifted 27%, well ahead of a year ago.