The demand for butter is shifting
Agropur will be observing the butter situation closely in the coming months. After several years of significant growth, the demand for butter has declined in Canada in recent months.
This is due mainly to the fact that what are known as further processors – companies that manufacture large quantities of bakery products – needed a lot of butter, causing the demand in Canada to more than double in the last five years. The growth was described by Agropur’s Director for Industry Relations and Milk Supply Richard Sanchez as “phenomenal”. However, with the current price decline, it is questionable whether the needs of Canadian further processors will also decline. This questioning could also apply to the needs of Canadian consumers in the retail market. The butter segment has accounted for a large part of the increase in recent years, and the Canada’s dairy industry is keeping a close eye on changes in the sector’s demand.
After increasing sharply in the last two years, world prices are now trending downwards. Economic instability, combined with the impacts of higher interest rates on consumption, have pushed the prices of the energy sources needed to produce milk downwards. “Prices soared when the war in Ukraine began just over a year ago, but have declined since. This has created a downward shift in prices throughout the supply chain,” says Mr. Sanchez.
As a result, butter prices are declining everywhere, including in the United States. Clearly, this has had an impact for Agropur. “The further processing market in Canada is influenced by world markets,” notes Mr. Sanchez. “In addition, a lot of our milk ingredients are sold throughout the world, and prices for these specific segments are directly connected to what is happening globally.”
The Cooperative, strengthened by its determination to remain competitive, will continue to do everything it can to optimize its operations and control the elements that fall within its scope. It will continue to monitor the situation closely and to adjust as best it can to its customers’ demands.
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