Butter prices in Europe and further afield have been under significant downward pressure since prices peaked at €7,000/t in September. In the final three months of 2017, butter prices corrected sharply back down to €4,200/t by the end of the year.

While such a sudden decline in price is difficult, butter prices appear to have found a new level around €4,000/t. Spot prices reported this week across Europe range from €3,800/t to highs of €4,100/t.

If this is sustainable and can become the new normal for butter pricing, Irish dairy farmers have a lot to be optimistic about. After all, butter consumption is in growth mode after a significant shift in consumer perception around the health benefits of butter in recent years. The spike in butter prices during 2017 was caused by a major shortage on the continent and butter stocks across Europe totally evaporated. However, milk supplies have recovered in France and Germany and stock rebuilding looks likely for 2018.

In saying that, butter supplies will remain tight for the coming months as this stock rebuilding takes place and demand continues to be robust. As such, the correction in butter prices appears to have bottomed out and €4,000/t could be the new normal for the coming months.

This would be significantly higher than other years. In 2016, the average price of butter in Europe was just over €3,250/t, while the average in 2015 was less than €3,000/t.