Market Reports

The bulls remain in charge in the butter pit. Grocers are anxious about stocking their shelves with enough product to last through the holiday baking season, and USDA’s recent reports have not calmed their fears.

Butter production is always scant in the summer, but it was especially so this year. There were just 314.4 million pounds of butter in cold storage at the end of July, 5.4% less than a year ago and the lowest mid-summer total since 2017.

Market observers are paying close attention to an evolving global milk production scenario as many key supply regions witnessed a shift in trajectory during June. U.S. production moved into positive territory during the month, rising by a modest 0.2% after months of decline.

The United States sent a record-setting volume of dairy products abroad in May. Then, after adjusting for a shorter month, it bested that record in June.

The bulls and bears squared off in Chicago this week, and the dairy markets lurched this way and that as the two sides fought for control. By Wednesday and Thursday, the bears won the upper hand, fueled by news that the U.S. economy contracted in the first half of the year, and that the Federal Reserve hoped to tamp down inflation by raising interest rates yet again.

After seven months in the red, U.S. milk production exceeded year-ago volumes in June, topping June 2021 by 0.2%.