Ukrainian butter producers focus on packaged products amid low wholesale margins – analysts
Ukraine’s butter market is currently under pressure due to a significant increase in warehouse inventories, forcing some operators to step up sales at minimum prices, according to the industry analytical agency Infagro.
"This indicates the absence of a clearly formed global trend, the market is still balancing between periods of growth and decline," the analysts said.
According to their data, the highest price offers are coming from New Zealand, while U.S. product remains the cheapest and European butter is positioned in the mid-price segment. It is this direction that Ukrainian exporters traditionally target. Despite a recent price increase in the European Union, the cost of Ukrainian product remains stable for now: traders are cautious in their purchases and point to the availability of alternative offers within the EU.
Partially easing the situation for Ukrainian processors is the rise in the price of skimmed milk powder, a related product that allows them to offset part of the losses from butter production. At the same time, export prices vary significantly depending on the destination country: supplies to the EU are carried out at lower price benchmarks, while Caucasus markets demonstrate a greater willingness to pay.
On the domestic market, producers are increasingly focusing on packaged products, where marketing tools and promotional offers help them maintain margins. Current price levels for bulk butter remain low-profit for major market players.
Market participants do not rule out that demand from Western traders may intensify in the near future. This could create preconditions for revising purchase prices for Ukrainian butter. At the same time, the industry continues to face a shortage of working capital despite increased production volumes.
