By Will Loux, Senior Vice President, Global Economic Affairs
The U.S. dairy market is awash in cream. Elevated butterfat content in the milk, rebounding milk supply, weaker production of full-fat cheeses, and soft demand for cream for food service have created the perfect storm to push butter prices to the lowest levels in nearly four years. Cream multiples are near the record lows of March 2020, even as domestic butter consumption is growing.
The relative weakness in U.S. butterfat markets runs in stark contrast to the rest of the world as Oceania and European butter markets sit comfortably north of $3.50 per pound. The United States’ current discount is such that, even if the White House’s reciprocal tariffs prompt retaliation
against U.S. butter by trading partners, U.S. butter could still be price competitive depending on the level of retaliation.
Given the unusual abundance of supply and price competitiveness, one would expect that U.S. butterfat exports would surge, and, indeed, the trade data suggests they are doing just that. U.S. butter exports more than doubled in February, and anhydrous milkfat (AMF) sales grew tenfold with volume increases of more than 3,000 metric tons (MT) compared to the same month the year prior. In fact, for the first time in more than two years, the U.S. exported more butter than it imported.
Even as U.S. butter and AMF exports surge compared to 2024, the U.S. will still face challenges in exporting to a tighter butter market. For one, U.S. butter typically has an 80% fat content and is salted, compared to the international standard of 82% and unsalted. Additionally, given that the United States has historically been a net importer of butter, the costs of entry to the international market for companies can be daunting. It takes significant investment by suppliers to export, including refocusing sales staff to build relationships with international customers, ensuring your product has correct documentation and labeling, and determining how to navigate an uncertain tariff landscape and sluggish global marketplace.
Given the costs to entry, U.S. butter typically has an extended lag time before converging with global prices compared to U.S. cheese or ingredients, as it takes more time before the United States starts moving butter and AMF overseas. As such, the United States is unlikely to export its way back to a tighter cream market right away.
However, if dairy companies can focus their export investment on building consistent, long-term international business — potentially in countries where the United States currently has a freight and/or tariff advantage, like Mexico and Central America — U.S. dairy farmers and manufacturers would benefit both by having a more consistent supply of butterfat moving overseas to meet growing global demand and by helping ensure U.S. butter prices don’t lag behind global markets for an extended time.
This column originally appeared in Hoard’s Dairyman Intel on April 10, 2025.
