European butter markets are closing 2025 under pressure as production increases and stocks accumulate, setting the stage for prices to fall below €4,000/mt in the first quarter of 2026. The EU Vesper Price Index for butter currently stands at €4,090/mt EXW as of December 3, with Q1 forward prices showing even more weakness.

The scale of the oversupply has become clear in recent fundamental data. European butter surplus reached 93,700mt across the first three quarters of 2025, driven primarily by production increasing 86,175mt year-over-year to 1,780,515mt. This production increase has been fueled by dramatically lower cream costs, which have collapsed from over €10,000/mt during the Christmas period last year to as low as €4,000/mt for the same weeks in 2025.

The sharp decline in cream prices has enabled high butter production at lower cost prices. European cream for the Christmas weeks is trading at these historically low levels, creating favorable conditions for continued butter production heading into the seasonal milk flush.

Global markets show simultaneous weakness across all major producing regions. This week’s Global Dairy Trade auction on December 2 saw both Oceanian and European butter prices fall significantly. The Oceania butter price now stands at €4,511/mt EXW, while US butter remains the cheapest globally at €2,727/mt EXW, trading at a substantial discount to maintain export volumes.

The timing compounds the pressure on markets. Trade activity is slowing as buyers focus on closing out 2025, with most having already secured their 2026 requirements. The FI Europe event in Paris and holiday preparations are taking priority, leaving few active buyers in the market during this seasonal slowdown.

Production volumes are expected to increase both seasonally and year-over-year due to strong milk output across all major producing regions, while demand remains insufficient to absorb the additional supply. With buyers having met a significant portion of their immediate and future needs, sub-€4,000/mt prices in Q1 appear inevitable. Market conditions are not expected to shift until well into Q1 next year.

This article is part of a more comprehensive butter market analysis. For the full analysis, visit: https://app.vespertool.com/market-analysis/2499