As the holiday season approaches, a time when butter demand typically surges, prices are telling a different story. The spot price for butter has dropped to lows not seen since 2021, even as consumers stock up for baking and game-day spreads.
Corey Geiger, lead dairy economist with CoBank, says it all comes down to supply.
“Butter demand is still up, sales over the past 52 weeks are up 4.5 percent, which is a really nice growth trajectory,” he explains. “But the butterfat coming off our farms right now is up 5 to 6 percent month-over-month.”
That imbalance is putting downward pressure on prices. Geiger points out that U.S. butter exports are up 250 percent through the first eight months of the year, helping keep the market from slipping even lower.
The surge in butterfat production is part of a broader trend on dairy farms, where both butterfat and protein percentages in milk are at historic highs.
“For the past decade, butterfat has been the moneymaker for farmers,” Geiger says. “But by this fall, that’s going to change. Protein is going to begin leading in the milk checks again, and it’ll probably stay there for a while.”
Butterfat can be adjusted with a feeding strategy – Geiger advises talking to your nutritionist to perhaps change the feed ration to save money and make a little less butterfat to maximize revenue.
