Updated prices for butter in Ukraine: growth due to reduced production

Against the background of a reduction in milk production and an increase in prices and demand for butter on international markets in Ukraine, an increase in purchase prices for milk is observed. According to the information provided by the analyst of the Association of Milk Producers, Georgy Kukhaleishvili, the average purchase price of extra grade milk as of August 27 is UAH 15.20/kg without VAT. This is UAH 1.08 more than a month ago. Prices for extra grade milk vary from UAH 14.00 to UAH 16.00/kg without VAT, where the upper limit has increased by UAH 1.40, and the lower limit by 40 kopecks.

For premium milk, the average price also amounted to UAH 15.20/kg without VAT, which is an increase of UAH 1.08 compared to July. This type of milk is sold between UAH 14.00 and 16.00/kg without VAT. The upper limit of the price range increased by UAH 1.40, while the lower limit increased by 40 kopecks.

The price of first-grade milk for the first half of the year amounted to UAH 13.97/kg without VAT, which is 77 kopecks more than in the second half of July. The minimum price for first grade milk is UAH 12.65/kg, and the maximum price is UAH 14.50/kg. The upper limit of the price range increased by 45 kopecks per month, while the lower limit remained at the same level.

In general, the weighted average price of three varieties of milk as of August 27, 2024 was UAH 14.79/kg without VAT, which is 98 kopecks more than a month ago. Giorgiy Kukhaleishvili notes that raw milk prices continue to rise due to a decrease in milk production and high demand from milk processing enterprises, which exceeds the supply on the domestic market. One of the reasons for the decrease in milk production is the abnormally high temperature that lasted until August.

Data from the Ukrainian Hydrometeorological Center indicate that in August the air temperature in Ukraine reached +35-38 °C, which created unfavorable conditions for cows. Prolonged power outages due to missile strikes by the Russian occupiers also negatively affected ventilation systems on dairy farms, leading to heatstroke in cows and reduced productivity.

The situation with high prices for butter on foreign markets also contributes to the increase in purchase prices for milk in Ukraine. The lack of fats in the world, the drop in milk production in such regions as Europe, the USA, and Oceania, as well as the devaluation of the hryvnia make Ukrainian milk more attractive for export. This leads to an increase in the demand for raw milk from processors and, accordingly, to an increase in prices.

Despite the general increase in purchase prices, the profitability of butter production in Ukraine has improved. Recently, the price of milk on the spot has risen by UAH 1.65, and given the possible increase in the cost of logistics in September due to the increase in excise duties on imported fuel, prices may continue to rise. It is expected that in early September, purchase prices for milk will rise again due to high demand from processors and a shortage of raw milk. Stabilization of prices is possible in the fourth quarter, when traditionally there is a decrease in demand for milk during the New Year holidays.