Butter prices have hit record levels in recent months threatening to hit bakery firms ahead of Christmas as chocolate and sugar costs have also surged.
Over the year so far, European butter prices have averaged 36% more than in 2023 at US$7,090 per tonne, according to dairy consultant Clal.
In September, prices were 87% higher at US$9,069, as strong demand has increasingly been met with tight supply as producers turn to more profitable products.
Butter production across the continent fell by 1.6% between January and July, despite a 0.7% uptick in milk output, European Commission data shows.
This follows a decline in milk production across ther major exporting regions of Europe, the United States and New Zealand last year.
Dairy producers had focused on allocating milk for more profitable goods such as cheese as a result, Rabobank analyst Michael Harvey noted, leaving butter supplies constrained.
The rise has left bakeries and food companies grappling with higher costs ahead of the Christmas period after both sugar and chocolate prices have also climbed in recent months.
Though large companies will have covered supplies before the festive season, smaller producers face a significant impact, French bakers and pastry federation FEB director Paul Boivin warned.