Is A Lack Of A Butter Bounce Back Concerning?

The U.S. dairy markets haven’t seen the typical butter bounce as demand often picks up ahead of the upcoming holiday season.

“Absolutely, this is a trend we've been watching for years, the last five especially," Mike North, president of the producer division at Ever Dot Ag noted.  "That trend towards more butter fat and protein in milk has really taken off. Management, of course, feeding, genetics have played a big role, and we don't see that slowing down anytime quickly, and so, the pounds of solids per hundredweight of milk continues to grow and makes us more productive as we've been adding more cows. And so, you know, as you look at this trend, we've been able to continue to make more and more product, and exports have been record, which has been a fantastic story, but our domestic demand has been lackluster at best.”

Butter Prices Return To 2021 Levels

Without solid export numbers, the market would be in a bad spot.

“Because of production of components, and because of some of that softer domestic demand, it has weighed on prices. And you have, as you pointed out, with butter, watched prices deteriorate back to levels in butter we haven't seen since 2021, as we were picking up the pieces from COVID," North said.  "And you know, we're looking at a $1.60 price there, a $1.60 price on cheese, and that's not the kind of market that warrants a $20 milk check. And so, you know, the components probably aren't going away anytime quick.”

Good News Exists

"As the world continues to grow and as the world continues to demand more protein and more butter fat, eventually that will catch back up, and we will eventually get back in front of this thing, and prices will have an opportunity to rebound for the moment, though, we're definitely feeling the headwinds of production," he said.  "I mean, heck, we've added 176,000 cows in the last year, producing more milk with more components. That's going to have a mark on price."

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