Butter price cut as international index hit by China logistics block

Butter prices are falling and other key dairy indicators are on the decline as China’s congested ports hit international trade.

Butter values on a key international index have melted by 3.7 per cent, falling in line with a variety of dairy commodities indicators.

The headline figure in the latest Global Dairy Trade declined by 3.6 per cent — the third consecutive fall since mid-March.

The latest result confirms the end of a record run for international dairy trade, which soared by more than 20 per cent between January and March before the Russia-Ukraine conflict and widespread China lockdowns created logistical headaches.

Dairy Australia industry insights manager John Droppert said this week’s GDT decline was part of the natural ebb and flow of international dairy trade.

But he said worldwide logistical challenges played a role in the price decline.

“The rises (in the GDT) over the past couple of months was in part due to demand, in part due to stockpiling of produce,” Mr Droppert said.

“That’s declined a little but does coincide with the lockdowns in Shanghai and other parts of China as well the logistical issues at ports across the globe which started last year and continued into this year.

“Also over that period, depending on what country you’re in, there have been rules about being a close contact and the impact that has on logistics.”

Mr Droppert said supply had subsided not only in Australia but other key dairy exporting nations.

“Looking at New Zealand, there’s been a decline of 4.5 per cent (year-on-year) and there’s milk supply issues in Europe and the United States. But demand has held steady, despite recent developments in China.”

Westpac NZ agri-economist Nathan Penny said reportedly up to 400 million Chinese citizens have been in some form of lockdown in the past week.

He said urban China lockdown had not only hit dairy but other commodities as well.