European butter markets are entering 2026 with ample supply. Strong milk production throughout 2025, particularly in the second half of the year, has carried into Q1, keeping stocks elevated and limiting upward price momentum.
Demand has not increased sufficiently to absorb the additional supply, and cheaper butter from global suppliers is adding further pressure. European producers are working through elevated stocks, keeping prices contained through the first half of 2026.
That said, the market has not moved in a straightforwardly weak direction. Geopolitical tensions in the Middle East triggered a sharp but short-lived price spike toward €5,000/mt in early March, before prices retreated to a rangebound zone around €4,500/mt. The bid-ask spread remains wide and volatility can flare quickly.
Outside Europe, the picture is notably firmer. US butter stocks are at their lowest level in five years despite production running above year-ago levels, with strong domestic demand and increased exports keeping inventories tight. New Zealand butter is attracting buyers from China, the Middle East, and Southeast Asia, supporting premium pricing in Oceania. The regional divergence is clear: Europe rangebound, while the US and Oceania point upward.
The picture is expected to shift in H2. European milk production is forecast to decline through Q3 and Q4, falling below 2025 levels. As milk availability tightens, butter production follows, and this seasonal decline should begin to reduce the current supply overhang. Price recovery is expected to be gradual, likely beginning in Q3 and building into Q4.
Read the full butter market analysis in the Vesper Dairy H1 2026 Market Outlook: https://vespertool.com/downloads/butt
