European butter prices rise amid tightening milk supplies

European butter prices have started to recover after several months of decline, supported by a seasonal reduction in milk supplies and rising raw material costs. According to Farmers Journal, butter prices increased by €50/t over the week in late October 2026, reaching approximately €3,700/t. Meanwhile, cheddar cheese prices remained stable at €3,800/t, while whole milk powder prices declined by €25/t. Demand for skimmed milk powder remains strong, keeping prices close to previous highs.

One of the main factors driving butter prices higher has been the seasonal decline in milk production across European countries. According to industry participants, milk availability is decreasing even in regions where calving takes place throughout the year. As a result, the average spot milk price has risen to approximately €0.47/liter. Higher raw milk costs are increasing expenses for dairy processors, particularly producers of butter, cheese and milk powders.

Meanwhile, rising European butter prices come amid increasing milk production in the US. According to the industry report, US milk deliveries in September 2026 were approximately 2% higher than a year earlier. Higher US production could intensify competition in international dairy markets, particularly for European exporters. Additional supplies of butter, milk powders and cheese from the US may limit further increases in global prices.

High cattle prices are playing an important role in supporting the profitability of US dairy farms. Revenue from sales of calves and cull cows accounts for nearly 20% of total farm income, while for some producers it represents the main source of profit. High beef prices, linked to historically low US cattle inventories, allow dairy farms to offset part of their production costs. However, a potential decline in beef prices could weaken farm financial performance and slow the expansion of milk production.

Future butter price trends in Europe will depend on seasonal milk availability, demand for processed dairy products and competition from other major exporters. Tightening milk supplies in Europe are expected to support butter and skimmed milk powder prices, while rising US production could limit price increases in international markets. For European dairy processors, the main risk remains rising raw milk procurement costs amid mixed price trends for finished dairy products.

Tags: EU, prices, butter