Rising feed costs and tightness in U.S. milk supplies has sent butter, cheese, nonfat dry milk and whey prices climbing to new highs this year. To withstand inflation, processors are prioritizing cheese vats over butter churns. Butter and nonfat dry milk production has seen declines, even during the holiday season when butter demand is typically at its peak. Processors pulled butter out of inventory in the last quarter of 2021, which has propelled butter prices to the highest level seen in six years. Now U.S. dairy processors grapple with how much inflation can be passed to consumers via higher prices of retail dairy.

Meanwhile, dairy exports continue to hold strong with resilient global demand notching total dairy shipments to new record highs.

Read more on dairy production, inflation and demand here.