Butter stocks hit 305M lbs – highest since 2021. CME prices plunge 25¢ as spring flush threatens profits. Can farmers pivot before margins melt?
EXECUTIVE SUMMARY: The USDA reports U.S. butter stocks surged to 305.53 million pounds in February 2025, the highest February level since 2021, driven by recovering milk production and cheap cream. CME spot prices dropped 25¢ to $2.30/lb, pressuring dairy profits as spring flush threatens further oversupply. While cheese inventories remain 5.3% below 2024 levels, farmers face a critical juncture: hedge strategically, diversify into specialty cheeses, or risk margins evaporating like “a Popsicle in a calf pen.” Immediate action is urged to navigate volatile pricing and June’s federal milk formula overhaul.
KEY TAKEAWAYS:
- Butter glut alert: 305M lbs in cold storage (+2.6% YoY) forces prices to 3-year lows ($2.30/lb).
- Cheese breather: Stocks down 5.3% YoY, but mozzarella/parmesan hit records amid pizza demand.
- Spring flush risk: Rising milk volumes could push butter prices below $2.00 without aggressive hedging.
- Profit math: 1 lb butter ≈ 2 bushels corn – a margin-crushing trade for minor operations.
- Survival playbook: Size-specific strategies from Class III futures to artisanal cheese shifts.
February’s USDA Cold Storage report confirms what dairy farmers already knew: Butter stocks are overflowing, hitting 305.53 million pounds – the highest February level since 2021. While cheese inventories remain 5.3% below last year’s levels, the butter glut has sent CME spot prices tumbling to $2.30/lb, down 25¢ since January. Here’s how this impacts your operation – and why spring flush might worsen things.
BUTTER: THE COLD STORAGE COW IN THE ROOM
- Stocks: 305.53 million lbs (Feb 2025) vs. 297.69 million lbs (Feb 2024)
- Price Trend: CME spot butter at $2.30/lb, down 25¢ YTD
- Cream Costs: Multiples below 1.00 for central region churns
Why Farmers Should Care
“That 25¢ price drop? It’s like losing a full diesel tank off your margin – every 1,000 pounds you’re hauling to market just became heavier.”
Churns are humming with cream – milk production is recovering, butterfat tests are up, and cream multiples are trading at fire-sale levels (below 1.00 in the Midwest). However, while domestic demand holds steady, consumers are increasingly reaching for imported butter. The result? U.S.-produced butter piles up faster than a spring calf gains weight.
Price Pressure Points
| Factor | Impact |
| Spring Flush | More cream = more churns = more butter |
| CME Rule Change | Older butter excluded from trading (post-12/1/24) |
| Consumer Shifts | Imported butter displaces domestic stocks |
“Tracking butter stocks is like watching a stubborn calf learn to nurse – predictable in theory, messy in practice. Here’s why…”
CHEESE: THE SILENT SPOKESPERSON
- Total Cheese Stocks: 1.38 billion lbs (-5.3% YoY)
- American Cheese: 783 million lbs (-5.7% YoY)
- Italian Cheeses: 16 million lbs below forecasts (mozzarella/parmesan hit records)
Regional Reality Check
The East North Central region (IL, IN, MI, OH, WI) still holds half the nation’s specialty cheese inventory. While Italian cheeses lagged, mozzarella and parmesan posted February records – a nod to pizza chains and pasta demand.
The Silver Lining
Cheese stocks are underwhelming, not overflowing. This tightness could soften the blow of butter’s price collapse – but only if you’re diversified.
ACTION PLAN: TURNING GLUT INTO GAIN
1. Hedge Strategically
| Farm Size | Strategy |
| Large | 40-50% hedging at $18.53/cwt Class III |
| Mid | Forward contract 30-40% through Q2 |
| Small | Explore specialty cheeses (e.g., artisanal gouda) |
2. Monitor the Federal Order Changes
June 1, 2025, marks a milk pricing formula overhaul. Producers should:
- Track USDA’s Q2 forecasts (e.g., cheese at $1.8200 vs. current $1.6200)
- Prepare for volatility – stock deviations could trigger price swings
3. Profitability Math
“At $2.30/lb butter, you’re essentially trading 1 lb of butter for 2 bushels of corn – a tough math for profit margins. Hedge early or risk getting milked.”
The Bottom Line
Butter stocks aren’t just numbers—your equity is in a freezer, melting faster than a Popsicle in a calf pen. With spring flush looming and prices below $2.40/lb, 2025 demands sharp hedging and diversified risk management. Stay vigilant—the market’s about to churn harder than a fresh bulk tank lid.
Read more:
- CME Dairy Market Report (March 20, 2025): Class III Futures Surge Above USDA Forecast, Cheese Blocks Rally Amid Strong Dry Whey Bidding
Delves into CME price volatility, global milk production trends, and export shifts impacting butterfat and cheese markets. - USDA’s 2025 Dairy Outlook: Market Shifts and Strategic Opportunities for Producers
Breaks down USDA’s revised forecasts for milk production, all-milk prices, and export competitiveness, with actionable strategies for farmers. - Why 2025 Could Be the Most Profitable Year for Dairy Farmers Yet: Navigating the Highs and Lows of Dairy’s Global Marketplace
Examines $8 billion in dairy processing investments, price risks from oversupply, and opportunities in component optimization.
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