Europe

Very quiet market

In this first week of January the EU butter market was very quiet. After the severe price fall we reported on early December the butter price briefly dropped below EUR 4000 ex works. This triggered buying interest for mainly further forward delivery dates, even up to 2027. There was even a brief period just before Christmas when demand outpaced supply. The sell side took comfort from this and prices came back up a little, to EUR 4100 for Q1 and EUR 4250 for Q2, both ex works. After the first week of January the market has not moved, but there are hardly any deals materializing. Sellers maintain their confidence and refuse to lower their prices, whilst buyers point out that milk and cream supply are abundant and that buyside stocks are sufficient to wait until the market comes their way. This situation may well continue a little while longer.

Americas

Old crop butter oversupply disturbs the normal market balance

The butter price in the US was forced even a little bit further down, to the current spot level of USD 1.355/lb (2990/t) ex works. This is the price for old crop butter, which remains very widely available and has only a short selling window on the CME spot call, as this will only accept new crop butter from March onwards. The production circumstances for milk, cream and butter remain favorable and demand strong, both domestically and internationally. Exports continue to flourish and the price differential for AMF with Oceania origin is becoming so large that one wonders how much longer processors can afford to favor Oceania origin. Contrary to the strong availability of old crop butter, the fresh – new crop – butter supply is extremely tight. This is supported by the carry in the futures market, where the current level for August 2026 is USD 1.88/lb. At the moment the spread between the front end and the back end of the market is extremely large, and this situation will endure until the start of March when the old crop butter can no longer influence the price level. In the box below we provide some further information on the US butter price development. 

Asia-Pacific

Too early in the year to see direction

The butter market in APAC is looking for direction. There is some buying interest and the early January GDT session came out positive, though the price hasn’t really changed when compared to the early December level that we quoted in the Market Watch. Market participants struggle to come to grips with stock levels and production figures. EU butter should, pricewise at least, be competitive in the region but there are few parties showing interest at the moment. Outside GDT the price for butter is now USD 5300-5500 and for AMF it is USD 6000-6250, both FOB. 

The graph below shows that the US butter price has about reached the lowest point that we ever reported in our Market Watch. There were only two instances where the spot price was even lower. The first time was in May 2020, when the havoc caused by the COVID lockdowns had a negative effect on consumption of butter as the food service market segment had virtually disappeared. At that point the price we reported was USD 1.20/lb. The second time was in February 2021 when the market circumstances may have been under the influence of similar old crop – new crop dynamics that we are experiencing right now. In Feb 21 the Market Watch price was 1.29/lb. One month later though it had jumped back up to 1.70/lb. At the current oversupply situation of old crop butter it will be interesting to see what the market balance will return to once only new crop butter can be sold on the spot call, as of March 2026.