Fitzcoraldo’s story appears pretty much word for word in ‘The Monthly Chronicle of North-Country Lore and Legend’ for December 1889 (p 548-550). It’s followed immediately by this:
We may observe that what is commonly known as Fairy Butter is a certain fungous excrescence sometimes found about the roots of old trees. After great rains, and in a particular state of putrifaction, it is reduced to a consistency which, together with its colour, makes it not unlike butter; hence its name. When met with inside houses it is reckoned lucky. Why so, we cannot tell.