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As Christmas approaches, bakers are facing rising costs due to record-high butter prices across Europe. Tight milk supplies, driven by increased demand and a shift in dairy production towards more profitable products like cheese, have led to a surge in butter prices, leaving small producers particularly vulnerable.
Why Butter Prices Are Soaring
Global butter prices have surged, with European butter reaching $8,706 per metric ton by late September, up 83% from the previous year. This rise is attributed to declining milk production globally and dairy processors prioritizing cheese production, which is more profitable than butter. Although milk output has slightly rebounded in 2024, it remains insufficient to meet growing demand.
Impact on Bakers and Pastry Makers
Small-scale bakers and pastry makers, especially those gearing up for the holiday season, will feel the financial strain of rising butter prices. While larger food companies have already secured their butter supplies, smaller producers may find it difficult to absorb the additional costs, particularly as they are also contending with increased chocolate and sugar prices.
Dairy Diseases and Supply Challenges
The situation is further exacerbated by diseases affecting dairy cows in Western Europe, such as bluetongue and Epizootic Hemorrhagic Disease (EHD). These outbreaks have heightened concerns about future milk supply stability, adding to the uncertainty in the market.
Global Market Outlook
The global butter market is expected to generate $42 billion in revenue in 2024, a significant increase from 2022. Despite the current challenges, the market is projected to grow annually by 7% through 2029. Analysts predict that while butter prices will eventually ease as production increases, this may take several months.
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