Butter prices started heading south in July this year (red on chart)
Butter prices have dropped to a multi-year low – around $1.80 a pound in September – well below the $2 historical threshold.The Daily Dairy Report notes that the $2.00-per-pound butter price compares to the annual CME butter price average of $2.8645 per pound in 2024, $2.5938 per pound in 2023, and $2.8596 per pound in 2022.
By the way, a recent government report says in 2024 farmers received 57 percent of what consumers paid for butter. Consumers typically pay around double what the farmer gets.
More cows
This last week’s Milk Producers Council newsletter writes that”Milk is absolutely gushing out of the U.S. dairy industry. Milk production reached 19.52 billion pounds in August, up 3.2% from a year ago. USDA revised its estimate of July milk output and cow numbers upward significantly. The agency now reports that dairy producers added 35,000 cows in July and another 10,000 head in August. That put the August milk-cow herd at 9.52 million head, larger thanat any time since late 1993 and up 176,000 head from a year ago.
The output is helping to reduce this fall’s milk checks for farmers. “Record-setting component levels continue to supercharge the growth in milk output. With 3.2% more milk, U.S. cows made 5% more butterfat.”
It’s not just butter but most milk-based products that are heading south.” The October Class III (think cheese) contract slumped 38ȼ to $16.80 per cwt., with similar losses and prices into early 2026. October Class IV (butter- powder) futures plummeted 60ȼ to $14.75. When October milk checks arrive in about six weeks, dairy producers who are exposed to the Class IV markets are sure to be disappointed.”
Dairy profitability depends on an average milk price at least in the high teens. In Kings County the average price in the annual crop report for milk was $26 per cwt in 2022,$19.30 in 2023,$19.10 in 2021 and $18.60 in 2020 (think Covid).
USDA has weighed in predicting the average price of milk will be about $1 lower in 2026 than this year.
Cattle Prices Set Record Highs
USDA says the August price for slaughter steers in the 5-area marketing region set a new monthly average
record at $243.14 per hundredweight (cwt), which was $6 higher than July and almost $54 above August last year. In early September, weekly cattle and wholesale prices softened from the daily highs set in late August but remain historically elevated. As a result, the third-quarter
price forecast for slaughter steers is raised by $2 to $240.00 per cwt and the fourth quarter is raised $4 to $244.00 per cwt. With that price strength being carried into 2026, the forecast for the annual price is raised $5 to $248.50.
Cattle prices are at record highs due to a low national cattle inventory after years of drought. Meanwhile there is strong consumer demand for beef and higher production costs. This summer shoppers are paying $6.25 per pound for ground beef.
Beef Exports down
USDA reports that U.S. beef exports in July totaled 211 million pounds, 19 percent lower than a year ago largely due to current trade disputes.
Monthly exports to the top six markets were lower year over year except for South Korea, which were up 15 percent year over year. Exports to China were down 94 percent while exports to Taiwan were nearly 26 percent lower year over year. Exports to Mexico were 17 percent lower than July 2024.