Holiday bakers could experience sticker shock at the grocery store as a variety of factors have sent the price of butter soaring in recent weeks.
Butter has been retailing for nearly $4 a pound as third-quarter wholesale prices rose to levels that haven’t been seen since 2004.
“People want it for their Christmas cookies,” said UW-Madison dairy economist Bob Cropp. “There are stores that have special promotions to get people in there, so you can maybe find some buys.”
Cropp said there are two reasons for the higher wholesale prices this fall: less cream available to make butter and high export levels that have depleted U.S. butter stocks.
“We’ve exported over 300 percent more butter than we did a year ago,” Cropp said. “Russia has been a big buyer because with the drought in that country, their milk production was down. Australia and New Zealand had some production problems.”
Cropp said the availability of cream is an extension of problems faced by dairy farmers due to low milk prices in 2009.
“The butterfat test from the cow has been a little bit lower, that’s part of it,” Cropp said. “Some of it is quality of feed and feeding practices.”
Cropp said economically challenged dairy farmers had to change their feeding practices and also were affected by a poorer-quality corn crop in 2009.
Cropp said butter buyers should see relief soon, as wholesale prices have fallen 75 cents or more in recent weeks.
“Butter prices will be lower in 2011,” he predicted.
Higher prices aren’t keeping butter sitting on the shelf, however.
“Sales have been pretty good at those prices, which is kind of surprising,” Cropp said. “It’s interesting because margarine sales are down from a year ago. Despite everything, it appears the butter buyers say, ‘If I’m going to eat something, it’s going to be butter.’”
