This holiday season has been anything but typical when it comes to butter, a time of year when prices tend to spike. However, this year, CME spot butter prices reached their annual high in July, then dropped precipitously between August and November, putting in a bottom of $1.43/lb. on November 25, then leveled out in the mid-$1.40s, before taking another step lower on December 19.
“Throughout 2025, U.S. butter has been the lowest-priced product among global dairy exporters, and as a result, the United States has seen an uptick in international butter sales. In fact, the United States moved from being a net importer of butterfat in 2024 to being a net exporter by 41.8 million pounds through September 2025,” said Betty Berning, market analyst with the Daily Dairy Report. “However, international butter markets have been eroding of late, and the U.S. price advantage is shrinking.”
In Europe, butter prices in June averaged $3.90/lb., their 2025 monthly high. The monthly average through the first half of December had dropped more than 40% to $2.31/lb., making European butter much more competitive with U.S. product.
“The timing of Europe’s butter price descent has been different than that which occurred in the United States, with the largest losses in Europe occurring between September and December. In fact, U.S. butter held a large discount of more than $1.40/lb. to European butter in August and September. But then as the fourth-quarter milk supply began to swell on the continent, European prices plunged, and the U.S. discount fell to 81 cents per pound, the closest the two prices had been in at least a year,” Berning said.
A similar situation occurred in New Zealand. Global Dairy Trade (GDT) butter prices peaked in May at $3.59/lb. and have since dropped 35% averaging $2.31/lb. at December’s auctions. While prices decreased throughout the second half of 2025, they plummeted between October and December. In December, butter from New Zealand sold for only 84 cents per pound more than U.S. product—after holding a premium of $1.40/lb. in October.
“Looking ahead to 2026, U.S. butter exports should continue their strong pace, given that most sales are booked about three months in advance, and deals for January and February would have been struck when the U.S. discount was still quite large,” Berning said.
“However, as prices converge, U.S. butter exports will likely slow, returning to more historical levels.”
Over the past two years, U.S. butterfat production has grown at a breakneck pace, and while exports are a small part of total demand, the increase has absorbed some of the surplus cream in the United States.
“As export sales slow, butter will pile up more than it already has,” Berning said. “Class IV futures prices have been quite dismal, yet further deterioration in prices to maintain U.S. export flow could greatly crimp on-farm finances, but losing the exports altogether would be even worse.”
