It’s not just the cocoa crisis putting pressure on the baking industry—now butter prices are hitting record highs too.

Across Europe, butter prices have surged to unprecedented levels, becoming an even more costly staple for bakers.

By the end of September European butter was trading at a staggering $8,706 per metric ton, marking an 83 per cent increase compared to last year, according to the latest data from the European Commission.

So, what’s driving this butter boom? Analysts point to a combination of factors: strong demand, low stock levels, and dairy producers shifting milk supply toward more profitable products like cheese. This is happening across the globe, with similar price hikes being seen in Australia and New Zealand as well.

For larger food companies, the blow may be softened since many have secured their butter stocks ahead of the Christmas production rush. But for small and medium-sized producers, the impact could be significant, with rising costs likely to hit hard. As Paul Boivin, director of the French bakers and pastry federation (FEB), puts it, “A rise in prices is unavoidable.”

The situation traces back to a decline in milk output last year in key regions like Europe, the US, and New Zealand—the world’s largest exporter of butter.

Low prices and high feed costs discouraged many dairy farmers from ramping up production. While global milk supply has bounced back somewhat in 2024, it remains tight in comparison to rising demand.

According to Rabobank dairy analyst Michael Harvey, this squeeze is likely to keep butter prices elevated in the near future.