US butter supply: ‘We’ve seen bigger deficits before’

By Teodora Lyubomirova

- Last updated on GMT


Related tags commodities Butter Inflation Food price inflation

A perfect storm of lower production and higher exports and demand has fuelled consumer fears that butter would be of short supply right before the winter holidays. Fear not, says IDFA.

The International Dairy Foods Association (IDFA) has dismissed claims that the US is facing a butter shortage in the run-up to key holidays such as Thanksgiving and Christmas – but a mixture of high demand for dairy, high butter exports and lower production means that things are tight in the butter market right now.

“While there isn’t a shortage, the US is experiencing tight stocks, prices that remain elevated, slightly lower production than we had last year, and higher exports of butter,”​ explained IDFA’s Matt Herrick, senior vice-president, public affairs and communications. “Competition for butter is high, too. All these factors together mean prices are likely to remain elevated through the holiday season and supplies will remain tight compared to last year.”

According to the US Department of Agriculture, there is 22% less butter in storage in October 2022 than there was the same time last year. The price of butter has also shot up by 24% compared to 2021, with the dairy product category up by almost 16% due to food inflation. “Even though Americans drink less milk each year, they are consuming more dairy overall,” ​Herrick explained. “In fact, America’s per capita consumption of dairy grew by 12.4 pounds [5.6kg] per person last year to 667 pounds [302kg] of dairy per person overall.  It takes a lot of milk to make butter. In fact, it’s a 20:1 ratio.

“Demand for butter among US consumers remains strong, especially at retail as inflation- and pandemic-formed habits have led consumers to prepare more food at home,” ​he added. “Processors have struggled to increase butter production in 2022 due to lower milk production on account of rising feed, energy, and labor costs. Milk production was down 1% overall through the first half of 2022. However, we’re starting to see milk production grow in the US and other major milk-producing markets after a slump in the first half of 2022.”

High levels of exports have compounded the situation according to Herrick, with a spike of around 40% or 11.7m kg of butter.  On top of that, the peak butter production season is over, and a period of high demand is fast-approaching.

“Butter stocks are down, but we’ve seen bigger deficits before,"​ Herrick concluded. "Price inflation will continue to be the main issue for butter as we approach the holiday season. If you’re looking for peace of mind, the best bet is to plan ahead. But a butter shortage? That is unlikely."

Related news