The European butter index experienced a historic moment on September 18 by breaking the threshold of €8,000 per ton of butter. European cheese and butter prices continue to outpace those of the rest of the world. Last week, EU cheese prices averaged $2.63 per pound, compared to New Zealand’s price of $2.09 and the US price of $2.13 per pound.
The correlation between rising butter prices and declining milk production is clear. The bluetongue virus, rapidly spreading across Europe, is a major cause of the reduced milk volumes. Dairy farmers in affected countries cannot keep up with the demand for milk, causing prices for dairy products, including butter, to rise. Additionally, increasing costs for animal feed, energy, and transportation place extra pressure on the dairy sector, pushing prices even higher.
In Germany, milk supply was down 1.5% in July. Rising costs for feed, energy, and transport are other factors contributing to higher dairy prices. Austria is also recording record-high butter prices. The price for a pack of butter there is even higher than in Germany.
France has shown a strong increase in butter prices as well. In September 2024, the wholesale butter price reached a record high of €8,180 per ton, nearly double the €4,260 recorded a year earlier.
The situation in the Netherlands and Belgium is similar. Milk production in the Netherlands hit its lowest level in a decade in August 2024, and production was already 3.2% lower in July than the previous year. Belgium also reported a decline in milk production.
Prices for butter are expected to remain high for the foreseeable future as supply stays limited while demand for dairy products remains strong. Across Europe, close attention is being paid to the development of the bluetongue virus and its impact on milk production and dairy prices.