Butter imports from New Zealand drop sharply

The drop in prices in the European milk fat market has clearly reduced the incentive to import butter from New Zealand recently. At the beginning of the summer, the import volumes were still extremely high, but these have significantly decreased in August and September. Meanwhile, New Zealand continues to produce more milk this season than last year. In May, June, and July, the Netherlands imported 3,160, 1,918, and 1,565 metric tons of butter (and AMF) from New Zealand, respectively, according to trade data (Harmonised System). This made the import volumes several times that of last year. At that time, there was still a shortage of butter in Europe. This made it attractive to bring butter from the other side of the world here. Throughout the summer, it became clear that there was no butter surplus in Europe. This explains why import volumes in August and September significantly dropped to 360 and 151 metric tons, respectively. In September, the import volume fell below last year's level for the first time this year. This is likely to remain the case for the rest of 2025. Due to the rapidly falling butter price and the surplus in the market, there is currently no incentive to bring New Zealand products here. Supply growth continues Milk supply in New Zealand continues to be impressive this season. In October, production was 3,130 metric ons, which represents an increase of 1.7% compared to the same period last year. Due to higher concentrations in the milk, the production in kilograms of milk solids was 2.8%. Production has not been this high since 2021. With $10 per kilogram of milk solid, the first forecasted milk price from market leader Fonterra for the 2025/26 season is still very attractive. However, it is expected that Fonterra will soon adjust the forecast downward, given the rapidly falling prices on the Global Dairy Trade. The New Zealand ANZ Bank has revised its own forecast this week by 3.5% to $9.65 per kilogram of milk solids. Other banks have also made similar adjustments earlier.