European butter prices have fallen by €785/t, or almost 12%, over the last two weeks, sparking fears of a downturn in milk price.

Butter prices have been declining steadily since June, when prices over the last six months peaked at €7,385/t, meaning they have dropped by over €1,360/t, or 18%, since then.

All of the major dairy commodities have seen significant price drops over the last fortnight, but not to the same extent as the price drops for butter.

ADVERTISEMENT

Speaking to the Irish Farmers Journal, Nate Donnay, director of dairy market insight with StoneX, said that the market is reacting very negatively to increased supply: “We’ve seen good milk production growth across all of the main exporting countries, and my expectation was that we would see dairy prices, particularly fat pricing such as butter, cheese and whole milk powder, shifting lower in the fourth quarter of 2025 and into early 2026.

Even with our estimated butter inventories up 80% year-on-year in the fourth quarter, it would still argue for €6,000/t butter and the spot market is trading at lower than that

“The declines that we have seen so far in Europe have been bigger than expected.

“The last four weeks have been pretty tough. I have been bearish on the market, but the declines now are bigger than expected.

“Even with our estimated butter inventories up 80% year-on-year in the fourth quarter, it would still argue for €6,000/t butter and the spot market is trading at lower than that. So fundamentally, I don’t know that prices have to fall any further than they have here in the fourth quarter, but there may still be some downward pressure into the second quarter of next year,” he said.

On the impact for Irish milk prices, Donnay says that he expects prices to remain in the mid-40c/l range for 2025, with prices dropping to the low 40c/l range for 2026.