European butter prices have fallen nearly 50% year-on-year amid weak demand, high stocks and ample milk fat, while SMP and whey stay firm. Short-term outlook bearish.
Prices
The current EU butter price is around 383 EUR/100 kg, compared with roughly 740 EUR/100 kg a year ago – a drop of about 48%, which is exceptionally steep by historical standards. Since the start of 2026, quotations have trended almost one‑way lower, with no meaningful corrective rallies.
Fresh 82% butter offers from Poland around 3.40 EUR/kg FCA (340 EUR/100 kg) confirm that physical spot levels in parts of Central Europe are broadly consistent with this weak EU price environment. Recent exchange quotes in continental Europe also underline that butter remains one of the softest dairy commodities, even as some international reference prices have stabilized modestly in late June and early July.
Supply & Demand
EU raw milk prices averaged 42.79 EUR/100 kg in April 2026, about 19.3% below April 2025, with major producers such as Germany and the Netherlands down around a quarter. Farmers are earning roughly 10 EUR/100 kg less than a year ago, which is incentivizing them to maintain or even increase deliveries to preserve liquidity instead of cutting output.
At the same time, Italian spot milk (Lodi) has risen steadily since March to about 45.5 EUR/100 kg, now trading above the EU average farmgate price. This points to somewhat tighter freely available milk and solid seasonal demand, suggesting that the raw‑milk downtrend may be nearing a trough even though absolute levels remain low.
Butter itself suffers from a combination of weaker consumer demand, high inventories and ample milk fat availability. Heatwaves and drought in key western European regions, especially France, are starting to curb grass growth and could trim milk output in coming weeks, but any tightening effect on fat remains overshadowed by the current stock overhang.
Fundamentals vs. other dairy products
The contrast between butter and other dairy commodities is striking. SMP trades around 269 EUR/100 kg, around 13% above last year, supported by firm export demand, balanced inventories and good international competitiveness. Whey powder is even stronger, at about 135 EUR/100 kg, roughly 45% above the previous year, driven by sports nutrition, protein ingredients, feed and export markets.
By comparison, WMP is around 318 EUR/100 kg, some 26% below year‑ago, as buying from China, the Middle East and North Africa remains cautious. Cheese prices across major varieties (Cheddar, Gouda, Edam, Emmental) are down between 16% and 28% year‑on‑year, confirming that the price correction now affects nearly the entire milk complex, with butter at the extreme bearish end.
Despite weaker milk prices, estimated EU dairy farm gross margins in Q4 2025 stayed clearly above 2023 levels thanks to lower energy and input costs. This cushions producers against the price slump and delays supply adjustments, prolonging the period of plentiful milk fat and complicating any quick recovery for butter.
Weather outlook & production risk
Western and southern Europe are experiencing another intense heatwave, with temperatures above 40°C in parts of Spain, Portugal and France and heat alerts extending into mid‑July. This pattern is expected to persist intermittently through July, underpinned by a blocking high over western Europe and very warm sea‑surface temperatures.
For dairy, this raises risks of heat stress on cows, lower milk yields and reduced forage growth, particularly in western France and Iberia. French farm groups already warn of potential milk output declines of up to 30% in the worst‑hit western regions and significant forage shortfalls. In the short term, these weather effects may slow further milk growth rather than cause an outright shortage, but they could modestly tighten fat balances later in the summer if heat persists.
Trading outlook (next 2–4 weeks)
- Price bias: Butter remains clearly bearish, with a base scenario of sideways to slightly lower prices over the next month, unless demand improves or milk fat availability tightens materially.
- Producers: Consider limiting forward sales at current depressed levels and using options or flexible contracts where available to retain upside if heat‑related supply tightening emerges later in summer.
- Industrial buyers & retailers: Current levels offer an opportunity to extend coverage into Q3–Q4 for at least part of requirements, but avoid over‑stocking given ongoing macro uncertainty and still‑weak end‑consumer demand.
- Traders: The deep discount of butter versus SMP and whey argues for a cautious, opportunistic approach, focusing on short‑dated physical trades and spreads rather than directional long positions in butter until clearer signs of demand recovery or stock drawdown emerge.
3‑day directional outlook
- EU butter (wholesale, bulk): Slight downside bias; prices likely to remain under pressure with limited buying interest.
- Central Europe physical butter (PL, FCA): Mostly stable to marginally softer around 3.40 EUR/kg, tracking weak EU sentiment.
- Dairy complex overall: SMP and whey expected to hold firm; cheese and WMP remain under mild downward pressure, reinforcing butter’s relative weakness.