Butter determines farm butter fat price.
In Europe, according to Dairy Industry Newsletter "Cream prices have soared, with nothing available for spot sales across Europe, and supplies tied up in contracts."
Today, USDA announced a DEIP bonus for butter to Africa and Middle East. Yet Dairy Market News state on October 1, 2009:
Oceania butter prices are trending slightly higher with a firm market
tone. Milk and milkfat volumes are tending to be lower than expectations and
butter output is below projected early season levels. Local cream supplies are
tight. Butter producers are able to fill the current local demand and prepare
stocks for upcoming contracts.
The high side of Oceania butter is at $1.36 per pound. Butter is even higher in Europe and Dairy Market News states:
Prices have firmed for both butter and butteroil across European markets. Market activity is mainly direct towards local usage as export movement remains slow. Local production of butter continues to trend lower seasonally and supplemental product is being pulled out of the PSA program.
As usual - more questions than answers, but, butter prices should be higher.