Butter prices have hit a record high this month as lower production levels create supply constraints heading into the holiday season when demand normally peaks.
The USDA says spot butter prices on the Chicago Mercantile Exchange hit a record high at $3.44 a pound last week. August butter production was at the lowest level in almost five years because of tighter milk supplies, fewer imports, and the increased use of cream in making other products. Agriculture Dive says the summer’s heat impacted milk supplies in two ways: the heat caused cows to produce less milk, and consumers demanded more ice cream and other dairy-based products. U.S. butter use has trended higher year-over-year since February, but production hasn’t kept up.
Year-to-date domestic use was 8.2 percent higher than last year, while production and imports rose only four percent. USDA says the surge in demand is much higher than is typical.