Strong EU butter production meets limited export expansion

After a period of strong price correction in 2025, the EU butter market has shown a notable recovery in early 2026. While butter production expanded significantly during the year, export growth remained limited, requiring internal market adjustments to absorb the additional supply. At the same time, imports increased sharply, particularly in bulk butter formats, suggesting stronger competition in industrial market segments.1. Benchmark OverviewDCA butter benchmarks closed at €4,350 per ton in week 10 (March 5), increasing by 8.7% compared with the previous week and 14.6% compared with the previous month. Current pricing follows an upward trend, after prices reached their lowest point of the year at the end of January, rising by €810 per ton over that period. Despite the recent rebound, butter benchmarks remain 36.5% below the levels observed one year earlier. Prices declined sharply since late August before stabilizing toward the end of December. Across the year, butter benchmarks displayed significant volatility, with a coefficient of variation of 22%.Theoretical prices of milk fat in butter remained above that of cream across 2025, with the gap widening notably toward the end of the year. Since December, the difference between the two has averaged €1,353 per ton. The pricing difference emerged as cream prices declined faster than butter prices during the late-year correction, likely due to cream’s higher sensitivity to fluctuations in milk supply. Although cream has a wide variety of uses, it is also a fresh product with limited storage possibilities. Hence, its price tends to react more quickly to rising milk availability, while butter can be stored and traded internationally.Butter prices also recovered in other major exporting regions. Monthly average prices increased by 5.6% in New Zealand and by 30.7% in the United States. That said, EU prices recorded the smallest annual decline among the three regions, falling by 27% year on year to €5,125 per ton in February, compared with declines of 33.8% in the United States and 40.8% in New Zealand. Despite the overall global decline, EU butter pricing has remained resilient compared with other geographies.2. Butter production grew faster than milk fat availabilityEU butter production increased by 6.1% year on year to 2.21 million tons in 2025. Germany accounted for the largest production volume in the region, increasing by 9.8% year-over-year to 524,750 tons. Further growth was reported in France (+5.5%), Ireland (+7%), and Poland (+8.7%).Milk fat availability expanded at a more moderate pace. Estimated milk fat output in the EU increased by 2% year on year to 6.11 million tons. Growth occurred across most major producing countries, including Poland (+4.2%), Germany (+1.6%), Ireland (+4.4%), France (+1.6%), and the Netherlands (+2.3%).Processors’ allocation decisions lie behind the difference between the growth in butter production and the more moderate expansion in milk fat availability. This shift was likely driven by market incentives. With cream prices declining faster than butter prices during the late-year correction, processing cream into butter became relatively more attractive for processors. Butter can also be stored more effectively than cream, allowing processors to manage periods of elevated milk supply more effectively.The Netherlands represented a notable contrast to the broader regional trend. Dutch butter production declined by 10.8% year on year to 106,000 tons despite an increase in milk output and milk fat availability. In this case, milk was increasingly allocated to the production of cheese and white dairy products. Moreover, Royal FrieslandCampina Den Bosch closed last year, temporarily reducing the production capacity for butter.3. Exports remained stable despite production growth, while imports increasedDespite the strong increase in butter production, EU export volumes remained broadly stable. Extra-EU exports reached 245,667 tons in 2025, increasing slightly by 0.8% compared with the previous year. Export growth was largely driven by Ireland, whose shipments increased by 13.9%, while several major exporters reported declines, including the Netherlands (–20.1%), Germany (–21.5%), France (–2.5%), and Poland (–19.3%).The composition of exports also shifted between segments. Shipments of retail-oriented butter increased by 4.4%, while exports of bulk-packaged butter declined by 3.6%. The growth in exports was primarily directed toward the United States, where EU shipments increased by 14.7% to 70,134 tons. Smaller increases were reported for the United Kingdom and South Korea, while shipments declined significantly to China and Indonesia.Within the EU, trade also showed signs of adjustment. Intra-EU exports declined by 1.3% year on year to 725,638 tons. The reduction was largely concentrated in the retail segment, which fell by 11.5% compared with the previous year. At the same time, trade in bulk-packaged butter increased by 2.7%, driven by higher shipments from Germany, Poland, and Ireland. The decline in internal flows was partly associated with increased domestic production in key markets such as Germany and France, which reduced their reliance on imported butter.At the same time, EU imports increased substantially, rising by 160.6% to 26,327 tons. This growth was primarily driven by shipments from New Zealand, Ukraine, the United Kingdom, the United States, and Norway. Import expansion occurred mainly in the bulk segment, which grew by 191.7%, while retail imports increased from a comparatively low base. Although import volumes remain relatively small compared with overall EU production, the increase suggests that imported butter may have partially replaced EU butter in industrial applications, where price competitiveness is more important as a purchasing factor.5. Market mechanisms and interactionOn the supply side, butter production expanded faster than milk fat availability in the EU during 2025, indicating that processors increasingly allocated milk fat toward butter production. This shift was likely supported by butter valuation compared to cream. During the late-year price correction, cream prices declined faster than butter prices, widening the theoretical margin between the two products and making butter production relatively more attractive. Because butter can also be stored and traded internationally, it provides processors with a flexible outlet for managing periods of elevated milk supply.Despite the strong expansion in production, export markets absorbed only part of the additional supply. Instead, internal market dynamics played an important role in accommodating the increase in butter output. While overall intra-EU trade declined slightly, bulk butter shipments increased, pointing to stronger utilization in industrial channels. At the same time, imports rose sharply, particularly in bulk formats, suggesting that imported butter was competing in the price-sensitive industrial segment. In contrast, retail-oriented exports increased even as intra-EU retail trade declined, indicating that EU butter maintained a stronger positioning in premium international consumer markets.According to the DCA butter production forecast tool, production is expected to remain elevated in early 2026, with first-quarter output projected to increase by around 5.2% year on year. However, recent price movements suggest that butter benchmarks are not fully aligned with short-term production fundamentals, indicating that global price signals and broader dairy market dynamics may continue to influence price formation in the near term.6. Implications for stakeholdersThe EU butter market absorbed rising production largely through internal adjustments rather than export expansion. While butter output increased significantly, extra-EU exports grew only marginally, indicating that a larger share of EU butter production was likely absorbed through domestic consumption and stock accumulation. At the same time, strong growth in bulk butter imports highlights increasing competition in price-sensitive industrial applicationsWith the supply outlook remaining firm in Q1 2026, current price levels may be influenced by broader global market signals rather than supply conditions alone. This exposes the market to potential price corrections, especially as availability remains high in both domestic and international markets.8. Methodological considerationsThis analysis is based on DCA Market Intelligence butter and cream benchmarks, compiled under established PRA methodologies. DCA benchmarks reflect independently assessed price levels derived from verified market inputs.DCA Market Intelligence’s Butter Production Forecast tool was used to estimate Germany’s butter production in Q1 2026. The model estimates production based on historical production data and current market indicators as predictive features, with no human intervention. Although the forecast considers a level of uncertainty, it achieves a mean absolute percentage error of 2.31%, considerably lower than the typical volatility in the sector. That said, the forecast does not guarantee actual outcomes.The DCA Market Report provides context and understanding to benchmark movements. It is not a forecast, nor a trading recommendation, or full market study. Access DCA Market Intelligence’s platform for continuous benchmark monitoring, historical price series, and additional market indicators.9. Additional referencesComext database Rijksdienst voor Ondernemend Nederland