It's not received much attention, but global butter prices have roughly tripled since Summer 2016 as production cuts have hit supply...

According to Bloomberg, global butter prices have almost tripled to 7,000 euros ($8,144) a ton from 2,500 euros in 2016, according to Agritel, an Paris-based farming consultancy. In Europe, prices peaked at about 6,500 euros a ton in September, the highest since the European Commission began collecting such data in 2000.

The problem can be traced to the end of (EU) milk-production quotas in April 2015 that led to a glut early last year in Europe, and a drastic drop in prices. This prompted production cuts by spring this year.

The reduction coincided with other global milk products exporters curbing their own output: the U.S. stopped selling abroad to address higher domestic demand while New Zealand, the world's biggest dairy exporter, experienced lower production due to droughts, Pierre Begoc, an Agritel analyst, said in a phone interview.

This chart, from the Global Dairy Trade's website shows that butter prices (in dollars) remain close to the recent high:
global butter prices

Bloomberg notes that the world's biggest per capita consuming nation, France, is experiencing shortages.

France's much-loved croissant au beurre has run up against the forces of global markets. Finding butter for the breakfast staple has become a challenge across France. Soaring global demand and falling supplies have boosted butter prices, and with French supermarkets unwilling to pay more for the dairy product, producers are taking their wares across the border. That has left the French, the world's biggest per-capita consumers of butter, short of a key ingredient for their sauces and tarts.

"The issue is purely French and is related to the fact that there's a price war raging between French retailers," Thierry Roquefeuil, chairman of the milk-producers' federation FNPL, said in a phone interview from his farm near Figeac, in Southwestern France. "French retailers refuse to increase prices, even by few cents, even for butter. Dairy producers see that there's an outside demand at higher prices so they sell abroad, and rightfully so."

It has become a political issue in France.

While France's Food Retailers' Federation is underplaying the shortages as a temporary logistical problem linked in part to people hoarding butter, the issue made it last week to the floor of the French parliament. Questioned by lawmakers, Agriculture Minister Stephane Travert said he hoped a deal could soon be found between retailers and dairy producers.

"I want to reassure all the consumers that soon butter will find its way back to shop shelves and consumers won't be deprived of this French commodity that does honor to French tables and is the pride of French dairy production," Travert said in the National Assembly on Wednesday.

A report released Saturday by the consulting firm Nielsen showed that 30 percent of butter demand in French supermarkets wasn't met between Oct. 16 and Oct. 22. The proportion was as high as 46 percent in some stores, mostly due to hoarding, it said.

Bloomberg delves into the shift in supply and demand dynamics in more detail.
"The butter shortage in French supermarkets is the direct consequence of the 2016 milk crisis which prompted a 3 percent drop in production," Xavier Hollandtsni, a Kedge Business School strategy teacher and an expert on agricultural matters, said in a note Thursday.

The butter market also encountered a push from the demand side. Butter and cheese remain the dairy products in highest demand, especially in Asia, according to Agritel's Begoc.

"Global demand started to pick up, with China starting to buy again after having stopped for a few months to tap into its stocks, leading to a substantial rise in milk and butter prices," Begoc said. French retailers have not adapted to the new market reality and have kept a cap on prices, Roquefeuil said. For French dairy companies, it's easier to export to countries such as Germany, where retailers are willing to pay a higher price, he said. "There's an evolution of butter consumption," he said. "Demand is strong and the industry has to adapt to the new consumption."
Below is a photograph of empty shelves in a French supermarket in the last few days, courtesy of the BBC.

butter shortage france
The BBC report asks,
Can it really be true that the French are running out of butter? That the country with the second biggest dairy sector in Europe (after Germany) is incapable of providing households with such basic culinary fare?
And concludes...

The answer is yes... and no.

Yes - there are indeed butter shortages in French shops. Shelves are emptying. Supermarket own-brands have become scarce, and often it is only possible to find more expensive varieties for sale. A sign in my local supermarket reads: "The butter market is facing an unprecedented shortfall in raw materials which is causing supply problems to this store." There is no butter crisis. If you need butter, you will find it. But it is obvious to all that the system is not functioning as it should do. Something is going wrong...

In other countries like Germany, supermarkets have responded to the changing world butter market by putting up their prices. In France, the cost to the shopper of a pack of butter has barely changed. This is because butter prices are set annually in France, in negotiations between supermarkets and producers. The next round of talks is not due until February, so until then the supermarkets are only offering to pay what was agreed nine months ago - when butter was much cheaper.

French producers are not foolish. They can see that the world market is much more attractive than the domestic market.
So they are saying "non" to the supermarkets, and selling their stock abroad. So this is why the answer to the question - is there a shortage of butter in France? - is both yes and no.

Once the current hoarding by consumers abates, Bloomberg expects butter to return to French supermarkets. However, Pierre Begoc of the Agritel consultancy expects that butter prices will only "head down slightly", as milk production recovers. It's another example of the theme of rising costs for essentials items that never seem fully reflected in official CPI statistics. Indeed, we are confident that government bean counters have perfected methods to substitute, or hedonically adjust, unhelpful threefold price increases.