Global Butter Prices Expected to Decline Amidst Surplus Supply
At the latest Global Dairy Trade (GDT) auction, butter prices fell by 2.5%, reaching USD 6,969 per metric ton (NZD 11,882). This marks a continued decline fr om the near-record peak of almost USD 8,000/ton recorded earlier in May 2025.
Despite the recent softening, current prices remain above last year’s levels, when butter averaged closer to USD 6,675/ton. The adjustment reflects a rebalancing in global supply and demand dynamics rather than a sharp collapse.
Supply Surplus Builds
The downturn is primarily being driven by a rise in global supply. Major producers, including New Zealand and the European Union, have increased output, creating pressure in export channels. Production gains are outpacing demand growth, particularly in Asia, wh ere consumer markets are still absorbing earlier imports.
Parallel declines across other dairy commodities reinforce the trend. At the same GDT event, whole milk powder (WMP) prices fell by 5.3% and skim milk powder (SMP) by 5.8%, indicating broad-based easing rather than an isolated adjustment in butter.
Demand Moderation
On the demand side, buyers are exercising caution. Some importers have slowed purchasing activity, weighing the implications of existing inventories and softer consumer trends. While retail butter prices in key markets had surged by more than 50% in recent months — particularly for standard 500g blocks — wholesale declines are expected to take time to filter down to consumer shelves. Contractual lags, logistics costs, and ongoing inflation in food supply chains remain factors.
Industry Outlook
Analysts expect butter prices to remain under downward pressure through the remainder of 2025. Supply pipelines remain full, and with weaker appetite from China and parts of Southeast Asia, exporters such as New Zealand may continue to face margin compression.
For producers, the challenge lies in managing higher on-farm costs for feed, energy, and storage against a softer price environment. For global buyers, however, the adjustment represents an opportunity to secure contracts at more favorable levels, particularly as seasonal demand increases toward the year-end holiday period.
The current correction underscores the cyclical nature of dairy markets: after months of record highs, the pendulum is swinging back, testing the resilience of both producers and traders in a more balanced — but competitive — environment.
