European butter prices have surged to record highs, putting pressure on bakers and pastry makers as they gear up for the Christmas season. This price increase, driven by strong demand, low butter stocks, and dairy processors prioritizing cheese production, adds to the challenges already posed by rising chocolate and sugar costs.
By the end of September, European butter was trading at a record $8,706 per metric ton, an 83% increase compared to the previous year. While large food companies secured their butter supplies ahead of the holiday production season, small producers are expected to feel the brunt of the price hike, according to Paul Boivin, director of the French Bakers and Pastry Federation (FEB).
Global milk production has struggled to keep pace with growing demand. Although there was a slight rebound in 2024, the supply remains tight. Dairy farmers, especially in Europe, the U.S., and New Zealand, have been discouraged by low prices and high feed costs, leading to reduced milk output. Producers are opting to allocate more milk to cheese, which is more profitable, leaving butter production lagging behind.
Additionally, the spread of diseases like bluetongue and Epizootic Hemorrhagic Disease (EHD) in Western Europe is threatening to reduce milk supply even further, exacerbating the already strained butter market.
As the global butter market is expected to reach $42 billion in 2024, experts predict that prices may ease as production ramps up. However, it may take several months before consumers and small producers see any relief.