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EU traders are describing the butter market as ‘a casino’, with some increased buying interest this week despite conflicting rumours about both shortages and ‘dumping’. With milk production forecast largely to stagnate next year in both the EU and NZ, who are responsible for more than 80% of world butter exports, availability could remain tight, according to latest USDA estimates. They see exports from NZ, the biggest shipper, rising by only 2,000 tonnes next year to 519,000t, and EU exports holding at 185,000t. The forecasts are based on expectations of flat butter production at 2.32m tonnes in the EU and 545,000t in NZ. Milk production in the EU is forecast to expand by just 0.1% to 156.4m tonnes, based on a small contraction in the dairy herd but better productivity of cows, and NZ production up 0.5% to 21.62m tonnes, thanks to some renewed growth in the dairy herd, but still well below 2014 levels. “Dairy processors face a dilemma whether they should take advantage of current high butter prices and risk building commercial stocks of non-fat dry milk, or choose less risky cheese production, which uses both milk fat and protein and remains in continuous demand on the world,” the EU offices of the USDA say.