Butter prices surged the most ever as American consumers devour more dairy fats and grocery chains begin purchases for the holiday season, straining supplies.
On the Chicago Mercantile Exchange, butter futures for October settlement jumped a record 5.7 per cent to close at $2.39 a pound, the highest for a most-active contract since 7 October. The price has surged 49 per cent this year.
Butter sales rose 17 per cent in mid-July from a year earlier as shoppers switched from margarine, according to data from Chicago-based researcher IRI. Consumers are also choosing whole milk and higher-fat cheeses and yogurts, limiting supplies of dairy fat for making butter, said Matt Gould, an analyst at the Dairy & Food Market Analyst newsletter.
“Butterfat consumption has been higher across the board,” Philadelphia-based Gould said in a telephone interview. “There are tight supplies, and now it’s crunch time.”
Prices may remain elevated in the second half. Most major grocery store chains are booking holiday orders for butter now, Gould said.
“A lot of buyers are nervous,” Ari Officer, a commodity trader at Chicago-based Traditum Group, said in a telephone interview.
More milk may be going toward making cheese, Gould said. Milk suppliers are receiving higher prices from cheese makers than from butter producers, further tightening supplies, he said.
Bloomberg News, edited by ESM
