Irish butter prices could be set to rise strongly over the coming weeks and months, with dairy buyers reporting acute shortages of bulk butter across Europe in the last fortnight.

The spike in supermarket sales in March and April due to consumer pantry loading has had the knock-on effect of clearing a huge volume of the stocks of butter in cold stores across Europe.

On top of this, European dairy companies have placed more than 50,000t of butter in the EU’s private storage (PSA) scheme since May, which is exacerbating the butter shortage.

With European countries easing COVID-19 restrictions in the last month, economies are beginning to reopen and food service businesses such as bakeries and food outlets are coming back online.

The return of the food service market, coupled with continuing strong supermarket sales, is resulting in heightened demand for butter at a time when stocks are running short.

Stocks

Butter stocks in major dairy-producing countries such as the Netherlands are said to be almost entirely cleared since March.

As a result, Irish dairy industry sources say they expect butter prices to get “very hot” this summer because of the supply shortage. At the same time, the prolonged drought conditions in Europe since May are keeping a lid on European milk production so far this year.

Dairy buyers are now looking at a picture of reduced milk supply in Europe coupled with a shortage of butter, meaning many are now scrambling to secure product as we move into the second half of 2020.