According to the USDA, butter production in August was the lowest in roughly five years due to a tightened milk supply, fewer imports, and the increased use of cream in manufacturing other products.
According to the USDA, "Milk production during September totaled 3.21 billion pounds, down 1.8% from September 2022 and down 2.8% August 2023. The number of milk cows on farms in California was 1.71 million head, down 9,000 from September 2022 and unchanged from August 2023. Production per cow in California averaged 1,875 pounds, down 25 pounds from September 2022 and down 55 pounds from August 2023."
Butter use in the U.S. has trended higher year-over-year since February, but production hasn’t been able to keep up. Domestic use year-to-date was 8.2% higher than last year, while production and imports only increased by about 4%.
Butter prices have hit a record high this month as lower production levels create supply constraints heading into the holiday season when demand peaks.
Although butter prices always rise ahead of the baking-heavy holiday season, the recent surge is “much higher than typical for this time of year,” the USDA said. As supply tightens further, farmers could begin to see a turnaround in milk prices.
The USDA stated that spot butter prices on the Chicago Mercantile Exchange averaged a “record high in trading history” at $3.44 per pound the week ending October 13th.
