Has the “butter bubble” popped?

ZISK
10 hours ago
1 min read

There’s a lot of talk these days about “bubbles” in the U.S. economy. That bubble discussion often centers around artificial intelligence (AI), private equity, and digital currency such as bitcoin. This begs two questions regarding the dairy market. Was there a butter bubble? If yes, did that bubble just pop?

Class IV milk futures, for butter and milk powder, have fallen drastically over the past few months, from $18 per hundredweight (cwt.) to settling at $14 per cwt. for contracts in the fourth quarter of 2025. Strong butterfat supplies making their way from dairy farms to processing plants have taken a toll on the U.S. market, pushing futures prices downhill quickly. Production and trade statistics help illuminate why this large shift has taken place in a short period of time.

More butterfat coming off the farm

U.S. dairy farmers have produced a 4.26% average butterfat content year-to-date through August 2025 compared to a 4.21% average in calendar year 2024, according to data from the Federal Milk Marketing Order. This additional butterfat has gone into cheese and butter production, as well as exports.

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