July market report

Butter is the talk of the trade

By far the most noteworthy dairy market at the moment is butter.

While butter typically peaks in late summer and early autumn, a surge in domestic spot prices that began in mid-April continues, sending prices from $2.0625 to over $2.7000 per pound by mid-June. And there’s no sign —at least for now— that indicates prices may fall back in the coming weeks.

So how high will butter go?

The key to answering that lies in recognizing two things: First, we have butter rallies every year. This is not uncharted territory.

Second, the circumstances driving the current rally appear to differ greatly from those that drove previous ones, so we also are in uncharted territory.

Previous butter rallies

Plot spot butter prices over time and you’ll notice that these rallies are par for the course. You’ll also notice that once butter prices peak for a few days, they usually fall back rapidly.

In 2014, prices marched steadily upward in the first seven months before leaping from $2.4000 per pound in August to $3.0000 by mid-September. It peaked at $3.0600 between Sept. 19 and Sept. 25 before falling back sharply, settling at $1.5500 by the end of the year.

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