Butter Prices Surge Ahead of Christmas Celebrations

By Sybille de La Hamaide

PARIS – Butter prices have surged recently, hitting record highs across Europe, posing challenges for bakers and pastry makers just before Christmas, amid rising chocolate and sugar costs.

Analysts attribute the price increase to strong demand, limited stocks, and dairy processors prioritizing milk for more profitable products like cheese.

As of September 29, European butter traded at a record $8,706 per metric ton, reflecting an 83% year-on-year increase, according to the latest European Commission data.

Although large food companies have secured much of their butter supplies for Christmas cakes and ice creams, small producers will experience significant impacts from rising prices, warned Paul Boivin, director of the French bakers and pastry federation FEB.

Last year, global milk output decreased in many regions, including Europe, the U.S., and New Zealand— the largest milk and butter exporter—due to low prices and high feed costs discouraging dairy farmers.

While global milk output saw a slight rebound in 2024, demand continued to outpace supply. Rabobank dairy analyst Michael Harvey noted producers preferred to allocate milk towards competitive products like cheese rather than butter.

Production Statistics

EU milk production increased by 0.7% from January 2023 to July 2024, the latest EU data confirmed. In that same timeframe, butter production fell by 1.6% while cheese production rose by 3.2%.

The U.S. Department of Agriculture (USDA) recently raised its 2024 U.S. butter price forecast to $3 per pound, a 15% increase from last year, due to a reduction in cow numbers and lower milk yields per cow.

According to the USDA, tighter milk supplies and strong demand are expected to sustain higher butter prices into 2025.

Global revenues from the butter market are set to reach $42 billion in 2024, an over 8% increase from 2022, with an expected annual growth rate of 7% until 2029, per Statista.

Concerns over declining milk supply due to diseases affecting dairy cows in Western Europe, like bluetongue and Epizootic Hemorrhagic Disease (EHD), have also contributed to the rise in European butter prices.

Although recent bird flu outbreaks in U.S. dairy cows have not been significant enough to affect the overall national milk production, USDA economist Michael McConnell stated that butter prices may gradually decrease as dairy producers increase output to capitalize on high prices, although substantial drops could take several months to materialize.