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Vesper has reported that butter prices are falling worldwide as a surplus of milk supply weighs on all major production regions.
According to the report published on 24 September, US butter production has grown 5.44% year-on-year so far in 2025, building on strong gains in 2023 and 2024.
Vesper wrote that in New Zealand, the milk season began with a 2.46% year-on-year surplus, while European output also rose markedly compared with the previous year.
The latest market analysis from Vesper stated: "The global milkfat market has now returned to a state more in line with the fundamentals: abundant supply, and... lower prices."
Meanwhile, US milk receipts rose 3.25% year-on-year in August, contributing to lower cream prices and creating favourable conditions for increased butter production.
Vesper wrote that ample milk supplies have forced producers to process more milk into storable commodities such as butter, adding further pressure to spot markets.
The oversupply situation has extended beyond fresh production, with market offerings including both newly produced butter and stock carried over from earlier in the year.
This, according to the report, suggests that supply conditions will remain strong in the near term.
Despite falling prices, European butter production has remained profitable, with production costs estimated at around €5,000 (US$5,860) per tonne, and cream prices at around €5,900 (US$6,914) per tonne in most European countries.
At the time the report was issued, New Zealand butter was trading at a premium to both European and US butter, a dynamic that could begin to pressure Oceania markets as the price gap widens.
Vesper said industry analysts expect butter prices in all three key regions to continue their downward trend.
According to the report, forecasts point to butter prices trending lower on the back of strong milk production, and are not expected to stabilise until the surplus in milk and milkfat output eases.
Source: ofimagazine