The Butter Spread: Margins May Depend on Which Side of the Atlantic You Bake On

The “Butter Crisis” of 2025 has officially collapsed, but the fallout has created a massive arbitrage opportunity. Based on verified futures data for January 19, 2026, the spread between the US and Europe is now over $1,800/MT. Here is the full breakdown of prices and what this deflationary cycle means for your strategy.

ByMaite Carricaburu

The market has shifted from “scarcity” to “glut” in record time.

Commodity analysis for mid-January 2026 reveals that the “Asymmetric Inflation” of last year has flipped into a deflationary cycle, but with a massive catch: the price gap between the US and Europe is wider than ever.

The European Crash (The Bubble Bursts)

In Europe, the butter market has gone from panic to surplus. After peaking near €8,000/MT in late 2025, wholesale prices have crashed to €4,275 per metric tonne as of January 16, 2026.

  • Demand Destruction:
    High prices cured high prices. When butter hit €8k, major industrial bakeries switched to hybrid fats (blends of shea/palm and dairy). Now that prices have fallen, those volumes haven’t come back immediately.
  • Inventory Wall:
    We are no longer short on fat. European butter stocks have ballooned, creating a surplus that is weighing heavily on spot prices.

The American Bargain Bin

Meanwhile, the United States is drowning in cream. Prices have stabilized at multi-year lows, trading around $1.41 per lb (approx. $3,108/MT).

  • The “Cream Flood”:
    U.S. milk production has defied expectations, with herds producing record butterfat components (>4.0%). There is simply too much fat in the system.
  • The Export Trap:
    While the U.S. has the cheapest butter in the world, it struggles to export enough volume to clear the domestic surplus, keeping domestic prices suppressed.

Despite the European crash, European butter is still ~60% more expensive than US butter.

If you are a global bakery, every kilogram of production you can shift to your US lines immediately adds $1,872/MT to your bottom line.

Sources