Rising Costs in Dairy, Coffee, and Gas Impact Market Dynamics

This week, Areté, a prominent agri-food intelligence firm, sheds light on the fluctuating prices of essential commodities such as milk, butter, coffee, and gas.

Butter and Milk

The prices of butter in the European Union have recently shown a declining trend after a record increase in 2024, with prices surging by about 50% to surpass 8.5 €/kg. Since early December, Kempten has seen a 9% drop, reaching the lowest levels since August 2024. Areté's analysis illustrates how increased profitability in butter and powder blends has boosted EU production amid a seasonal slowdown in demand, reversing the inflationary trend. At the same time, the spot milk prices have dropped by 19% in Milan since December's start.

Coffee

Coffee prices remain elevated due to enduring bullish fundamentals. On the ICE market in December 2024, Arabica and Robusta observed 7% and 11% increases, respectively. The Arabica premium over Robusta reached approximately 92 c$/lb, marking a 47% increase compared to November. Despite inflation persisting for over three seasons, the U.S. Department of Agriculture confirms a fourth consecutive global coffee market deficit in 2024/25, with stocks reaching their lowest point since the 1999/00 season.

Natural Gas

Areté highlights that TTF prices in December 2024 maintained an ongoing inflationary trend since early 2024, registering a 1.2% rise compared to November and a 75% jump since February 2024. Early 2025 forecasts suggest surpassing the 50 €/MWh threshold for the first time since October 2023, backed by a geopolitical climate inducing supply uncertainty and spurred demand from industrial production encouraged by softer ECB monetary policies.