While there hasn’t been a lot of good news lately when it comes to dairy prices, here’s something to celebrate. The holiday butter rally is underway, and it may even be a little early.
The CME spot butter price hit a new all-time at the end of last month and then closed even higher at $3.34 per lb. last Monday before climbing to $3.42 per lb. on Tuesday. Since the beginning of last month, the CME spot butter price has climbed 74 cents. The rapid increase is surprising some in the industry, especially since the year started with stronger production. Smaller supplies and good demand here at home over the summer helped to push prices higher.
“I think part of [the higher butter prices] is that we’ve had really good demand,” says Ben Laine, dairy economist with Terrain Ag. “We’ve got reasonable to on the low side butter stocks, but domestic demand has been strong. We’re getting to that time of year when retailers start getting concerned about if we’re going to have enough butter for the holiday season. That’s the big demand part of the year.”
Laine says that as processors make more cheese ahead of the holidays, that is pulling in some of the milk that would have been used for butter. This is helping Class IV prices as well as driving the price of butter to all-time highs.
