Ukrainian producers are forced to lower butter prices: what are the reasons?
1 June 11:17
Despite signs of rising butter prices on the global market, the Ukrainian sector has yet to feel the positive effects of this trend. "Komersant Ukrainian" reports, citing Infagro.
“Inventories of unsold products continue to accumulate, and shipments to European Union countries remain economically unprofitable. Under these conditions, producers are forced to lower domestic prices,” the publication reports.
Market participants are employing various strategies to minimize losses. Some companies with sufficient financial resources are postponing sales in anticipation of more favorable market conditions, while others are actively shifting their focus to the markets of Moldova and the Caucasus region. At the same time, most producers are relying on promotions and special offers to stimulate retail sales of packaged oil. As a result, consumers have gained access to a wider range of promotional products at more attractive prices, which is contributing to the growth of domestic oil consumption.
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Exporters note that even amid a certain rise in product prices in Europe, sales of Ukrainian oil on European markets remain challenging.
Price pressure is also intensifying in the domestic market. The price range is widening mainly due to a drop in the lower limit, and market participants do not rule out further price reductions due to rising inventory levels.
The situation is complicated by the fact that producers continue to ramp up output despite low profitability. According to industry experts, butter production volumes in May reached their highest level in recent years and exceeded domestic market demand. High production rates are expected to continue into early summer, after which a gradual reduction in output is possible.
Experts emphasize that increasing exports is critical to stabilizing the market situation. However, sales prospects to Poland and the Baltic states currently remain limited due to unfavorable economic conditions, while individual shipments to other European countries may still take place.
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