Butter Market - United States
The US butter industry experienced volatility throughout 2024 and into early 2025, driven by an oversupply of cream and shifting demand. Prices peaked early in September 2024, which is unusual for a market that typically sees seasonal highs in October, then declined sharply.
Butter prices usually increase ahead of the winter holidays, but in 2024, buyers front-loaded purchases earlier in the year. As milk production rose with the spring flush, cream supplies grew, particularly as mozzarella production (which uses less fat than cheddar) left excess cream in the market. Butter producers took advantage of low cream multiples to ramp up production and build cold storage inventories.
In 2025 so far, butter prices have dropped further as inventories stayed high, and cream remained readily available.
US Forecasting Insight
Butter prices (SDBN) have continued to tumble after the peak back in September last year and remain in a downtrend. However, we expect that the downside potential is starting to become limited and that the risk is to the upside. Prices have a seasonal tendency for a low in Spring due to the usual milk flush, but this is usually followed by an increase towards September or October. Therefore, we can see prices continue to decline a bit longer before the increase can begin. Due to the oversupply of cream last year, we have seen inventory levels increase, and this is expected to continue in 2025. Therefore, we should not see the same spike in prices as previously, even if we start to see small milk production, as producers have stocked butter in cold storage.
Butter Market - European Union
The EU butter market saw significant volatility through 2024 and into Q1 2025. Prices increased throughout the year, reaching an all-time high of €8,375/MT (EBP - J116) in November. This was supported by strong demand and tight supply, as processors diverted milk to cheese and whey production, which were more profitable.
EU butter production dropped by 1.1% in 2024, falling to 2,088,000 MT. Demand remained firm throughout the year, and shorter, smaller contracts became common due to budget constraints. This frequent spot-market activity sustained demand momentum and contributed to the bullish tone.
After the November peak, prices dropped sharply through December as buyers secured December contracts early to ensure holiday supply. Q1 2025 saw further volatility, with prices rising briefly in January and again in March, before declining once more due to lower buying interest and increased milk fat availability.
Despite milk intakes trailing slightly behind 2024 levels, increased fat availability supported butter output and growing stock levels. EU butter exports totaled 244,114 MT in 2024 (11.7% of total production), with major partners including the US, UK, China, and Saudi Arabia. However, exports to the US represented only 3% of total production, suggesting limited direct exposure to tariff risks.
EU Forecasting Insight
The price of butter has been increasing in the last half of Q1 and Q2 2025 so far. We expect that prices will continue to go up in Q2. We do not expect the tariffs from the US will have a major impact on prices as the majority is consumed within the EU and the US is capable is covering most of its own demand. Depending on milk prices, we may see the increase continue for longer. Furthermore, if more milk is allocated to cheese, which we have previously seen, prices may remain stable. However, given the high price of butter this may be less likely.
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