World prices eased back towards the end of 2012 although remained at levels comparable to the same period in 2011. The southern hemisphere has moved past its seasonal peak, with reports from New Zealand suggesting production levels might fall below the previous year for the second half of the season.
EU prices are still partially underpinned by available milk supplies. December prices were up on November with the exception of food grade SMP. In butter markets, Private Storage Aid stocks are reported at 23,000 tonnes, and with tentative seasonal recoveries in milk production, wholesale prices may not fall to the same degree as in early 2012.
In the UK, the tight supply situation dominates market movements. As expected, wholesale prices fell seasonally during the period between Christmas and New Year. While cream prices fell by £70/tonne to £1,410/tonne between November and December, prices fluctuated between the pre- and post-Christmas period in December. Butter prices eased slightly (down £50/tonne to £2,800/tonne) although the lack of available milk supplies means that the market remains finely balanced.