Milk prices are rising: Ukraine may return to butter imports

In Ukraine, the gradual increase in purchase prices for raw milk continues, but the growth rate is no longer as rapid as in previous months. According to experts, the current market situation does not provide grounds for further increases in the price of dairy products, especially in the context of reduced export activity on the eve of the New Year holidays.

The average purchase price of extra-grade milk as of mid-December is 19.70 UAH/kg excluding VAT, which is 65 kopecks more than a month ago. The price of premium milk reached 18.70 UAH/kg (+30 kopecks), and first-grade milk – 17.65 UAH/kg (+50 kopecks). On average, the price of the three main types of milk was UAH 18.68/kg, which is 48 kopecks higher than the November level, reports Georgy Kukhaleyshvili, an analyst at the Milk Producers Association.

Demand for raw milk and finished dairy products still exceeds supply, but is starting to decline compared to the autumn months. At the same time, the New Year holiday period in Europe may halt activity on the dairy market, experts predict. Ukrainian producers expect a reduction in sales of fresh products due to the increase in prices for dairy products in recent weeks.

One of the key problems is the decrease in the volume of milk coming from households. Factories engaged in the production of butter and powdered milk are not ready to buy milk at the current high prices. The situation is complicated by the decrease in butter prices in Europe, which makes imports more profitable.

Analysts warn that at current prices, Ukraine may once again start importing butter, as it did in 2023. Then the domestic market was replenished with cheaper imported butter, which restrained the growth of raw milk prices. This trend is likely to repeat if the market situation remains unchanged.

A similar situation is expected in the cheese segment. European producers, who receive state subsidies, can offer products at lower prices than Ukrainian cheesemakers. This leads to an increase in the volume of imports of European cheeses, which are becoming popular in Ukrainian retail chains. Thus, high prices for raw materials create significant challenges for domestic dairy production and increase dependence on imports.