EU Butter Market Holds Firm While Protein Prices Surge

EU butter prices are currently stable at elevated levels, while skimmed milk powder has moved sharply higher, tightening the value gap between fat and protein and supporting firm butter sentiment. After a phase of gradual softening in European butter benchmarks, physical quotations for German branded butter are unchanged this week, indicating a pause in the downside. At the same time, skimmed milk powder prices for both food and feed quality have jumped, signalling stronger demand for milk protein and a firmer overall dairy complex. Futures and physical indications across Europe still point to a well‑supplied market, but the recent protein rally reduces downside risks for butter in the near term.

Prices

German branded butter traded on the Kempten exchange on 14 October 2026 is quoted unchanged at 4.68 EUR/kg for wrapped butter, with a range of 4.35–5.00 EUR/kg, and 4.15 EUR/kg for bulk butter, within 4.05–4.25 EUR/kg, both showing no week‑on‑week movement.

In the physical spot market, additional indications from Poland show fresh 82% butter ex Grudziądz FCA at 3.6 EUR/kg on 13 October 2026, up from 3.52 EUR/kg in September, underlining a modest upward trend in Central Europe. Exchange‑based benchmarks around 4,175 EUR/t confirm that current butter values remain high by historical standards, even though they are below last year’s peaks.

Supply & Demand

Stable branded butter quotations alongside rising skimmed milk powder prices suggest that cream and fat supply is still comfortable, while demand has normalised after the previous highs. EU processors continue to prioritise cheese and protein output, which caps butter production growth and helps to prevent a steeper price correction.

On the demand side, retail and foodservice offtake in Europe appears seasonally solid ahead of the year‑end period, but buyers are more price‑sensitive than in 2022–2023. Export competitiveness of EU butter is mixed: European prices remain higher than US levels, limiting some overseas demand, yet the weaker euro and tight Oceania supply keep the export window partly open.

Fundamentals: Protein Rally

The most dynamic move in the dairy complex is in milk powder. On 14 October 2026, skimmed milk powder for food quality is quoted at 3,550 EUR/t (range 3,500–3,600 EUR/t), up 170 EUR/t on the week, while SMP for feed quality stands at 3,445 EUR/t (3,420–3,470 EUR/t), also up 170 EUR/t.

This rapid appreciation in protein tightens the historical spread between butter and SMP and improves the relative economics of channelling fat into butter rather than additional powder production. It also signals stronger international demand for protein, especially from feed and food manufacturers, which could indirectly lend support to cream and butter values if milk availability turns lower into winter.

Short-Term Outlook & Weather

Weather across key EU milk regions is typical for mid‑October, with cooler temperatures reducing pasture growth and nudging milk production seasonally lower. No major weather disruptions are reported at this stage, but any further reduction in grass quality will gradually tighten raw milk supply for butter and powder production over the coming weeks.

Given steady butter quotations and surging skimmed milk powder, the near‑term outlook points to sideways‑to‑firm butter prices rather than renewed declines. Futures and benchmark indices for late 2026 still trade below current spot Kempten levels, suggesting limited upside but also a floor supported by the stronger protein complex.

Trading Outlook

• Buyers with Q4 coverage gaps should consider scaling in on minor dips, as the sharp rise in skimmed milk powder reduces the likelihood of a deeper butter correction.
• Sellers (producers) may hedge a portion of Q1 2027 output at current forward levels, which still price in a modest discount to today’s physical quotations while protecting against potential macro‑driven demand weakness.
• Traders should monitor the butter–SMP parity closely: if protein continues to firm, the relative value could shift further in favour of butter, tightening offers for high‑quality branded product.

3-Day Market Indication