Global butter prices drop due to milk oversupply
Butter prices have dropped worldwide due to an oversupply of milk hitting all major producing regions, Vesper reported.
In New Zealand, the milk season started with a 2.46% year-on-year surplus, and European production had also increased significantly compared to the previous year, Vesper wrote.
“The global market for butterfat has now returned to a state that is much more in line with the fundamentals: plenty of supply, and … lowering prices,” Vesper’s latest market analysis said.
Meanwhile, US milk intake rose 3.25% in August year-on-year, contributing to falling cream prices and creating favourable conditions for increased butter production.
The abundant milk supply was forcing producers to process more milk into storable commodities like butter, further pressuring spot markets, Vesper wrote.
The oversupply situation extended beyond fresh production, with market offers including newly produced butter and inventory from earlier in the year.
This indicates that supply conditions will remain robust in the near term, according to the report.
Despite falling prices, European butter production remained profitable, with production costs estimated at €5,000 (US$5,860)/tonne and cream prices around €5,900 (US$6,914)/tonne in most European countries.
At the time of the report, New Zealand butter was trading at a premium compared to European and US butter, a dynamic that could begin to pressure Oceanian markets as price differentials widened.
Industry analysts expected butter prices across all three major regions to continue their downward trajectory, Vesper said.
According to the report, the outlook suggests that butter prices will be driven lower by strong milk production and will only stabilise once the surplus in milk and milkfat production moderates.
Source : Dairynews7x7 Oct 9th 2025 First published in OFI