Butter topped $1.90 this week as inventories have declined dramatically in the past three months, to a five-year low at mid-year.
At the same time, butter consumption is up 15-20% compared with five years ago, so that inventory is not satisfying the demand.
This is pushing cream multiples dramatically higher as cream supplies also remain tight due to above-normal temperatures throughout most dairy regions, including the Northeast and Upper Midwest.
Farmers everywhere are talking about their butterfat components being lower than usual for their herds. Some blame the heat, others blame last year’s forages. Either way, this is contributing to the tight butterfat situation in the country, and worldwide. Look for this to have some impact going forward.