Butter futures are at an all-time high, reports Bloomberg, and consumption is projected to rise 0.8% in 2014. That number marks its second-highest since 1965, with shipments up 42% in the first six months of this year already.
But the problem is, there isn’t enough butter getting made to keep prices low for consumers — not as much milk was produced this year as analysts thought, which means all the makers of dairy products have to fight for what milk there is.
“Ultimately, there’s good demand for cream-based products that’s tightening up the market,” Dave Kurzawski, a Chicago-based senior broker at INTL FCStone Inc., told Bloomberg. “We haven’t had a tremendous amount of milk to deal with either, and the quality of fat in milk has gone down.”
Our appetite for cheese could be to blame as well, explains Cameron Thraen, Ph.D., Ohio State University dairy marketing and policy specialist tells the Scranton Times-Tribune.
“Milk follows money,” he said.
Milk gets made into whichever product is the most expensive, he says, which recently, was cheese. When cheese costed more than $2.20 per pound, cheese makers went nuts and bought up all the milk. Butter competitors then had to shell out more money for what milk they could get, and pass it on to the consumer.
There’s some good news in all this buttery sadness: Once all the stores are stocked up with butter for the holiday season, when Americans will need it slathered over all manner of traditional meals, prices should go back down again.
No margarine for error with butter prices at all-time high [Scranton Times-Tribune]