Does perfect weather mean bad news for dairy?

In this episode of The Milk Check, Ted Jacoby III and the Jacoby team welcome guests from Cefetra Dairy, Henk-Jan Bouwman, Head of Account Management; Martijn Goedhart, Managing Director; and Veljko Perovic, Commodity Market Analyst and Derivatives Trader.

Together, we unpack why the world is swimming in butter and what it means for producers, traders and processors heading into 2026.

You’ll hear:

• Why too much 80% salted has the U.S. sloshing in inventory


• How Europe went from record highs to €2,000-per-ton losses


• When demand might finally catch up with supply

Click play below and listen now to The Milk Check episode 84: Swimming in Butter – Global Insights from Cefetra Group.

Got questions?

Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the podcast.

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Ted Jacoby III: Welcome everybody to The Milk Check, a T.C. Jacoby & Co. podcast.

We have a really exciting episode today. We are going to be discussing the U.S. and European butter markets and how that’s going to affect global butter supply, global butter demand, and obviously price. We are joined today by our good friends from Cefetra Dairy.

We’ve got Martijn, Henk-Jan, and Veljko from Cefetra Dairy. Really looking forward to this discussion.

Joe, we’re gonna start with you. What’s going on with the U.S. butter market? We’ve just dropped in the last two months, what, 60, 70¢? I feel like the bottom just dropped out. What’s been driving this, and how’s this gonna play out going forward?

Joe Maixner: Well, long story short, there’s too much 80% salted sitting in inventories,

both in trader’s hands and in manufacturer’s hands. There was a lot of product built earlier in the year when there was a great carry in the market [00:01:00 ] and when cream was plentiful.

All of that product is coming back to the market because cream is still plentiful and manufacturers aren’t needing it for micro fixing. Demand has been good, but not great.

Ted Jacoby III: Is it safe to say that even if we’re having good butter demand in the U.S. right now, it doesn’t compare to the increase in supply we’re dealing with?

Joe Maixner: Absolutely. We’re so much higher year over year on fat component and milk production that we just physically can’t consume as much butter as we’re producing.

Ted Jacoby III: Mike Brown, my question for you is this, we’ve come down from $3.50 two years ago, $2.50 earlier this year, now we’re at a $1.75. We’ve talked a lot about on this program how the genetics have dairy cows producing a lot more butterfat than they have in years past, and that’s a trend that has really changed the supply side dynamic for butterfat in the U.S. At a $1.75, does that trend change?

Mike Brown: The genetic trend of course won’t change ’cause it’s permanent .

People have been making decisions to improve fat content of milk for a long, long time. It’s been [00:02:00 ] emphasized because of the high value of fat. And so it’s already built into not only the current dairy herd, but the animals that will be replacements over the next two or three years.

On the feeding side, that’s another story, but most folks I talk to say a $1.50, $1.70 fat probably isn’t gonna make a lot of change in feeding and management on a dairy farm. You may see some of those higher expensive fat additives that are used to increase fat used a little less heavily, but the trend overall will be there.

Will the rate of gain continue to be as high? I think is a good question, but I don’t think the trend toward gaining fat’s gonna change certainly in the next two, three years.

Ted Jacoby III: So, this is a question for both Mike and Gus. One of the rumors I’ve heard is that there have been some raw milk buyers out there who have been talking about putting caps on butter, fat percentage in milk, or at least what they’ll pay for.

If that does happen, is that going to affect the increases in butterfat percentages in the milk?

Gus Jacoby: I haven’t seen anything but your cheese make yield formula pay prices have some sort of discount for fat [00:03:00 ] at those higher levels. That’s the only thing that I’ve really noticed in the industry that’s in some way penalizing that increased fat in milk production. Other than that, I’m not aware of anybody who’s discounting fat in any other ways.

Mike Brown: What I’ve seen is consistent with what Gus has seen so far, but there’s lots of things going on in the background.

Federal Order fat is priced off the Grade A butter market, and that price is what it is. Most cheese plants can’t begin to recover that value of fat, particularly if they’re in the spot market with any extra cream or certainly with whey cream. So, they’ve been losing money.

I particularly have seen out West, where the added value for the extra fat has been decreased. There’s plants looking at: should we be pricing it off what our whey cream is worth rather than the butter market? ’cause that’s more what the value really is. The other thing you’re seeing, I think, is even within formulas, should we be deflecting from fat a bit and putting more weight on protein because that’s what we really need to make the cheese. Not necessarily lower the price, but try to send some signal to producers to focus more on protein. ’cause the focus has certainly been [00:04:00 ] on fat with the high-fat markets.

Most of your cheese plants cannot recover that value, particularly when you get fat that’s more than 130%, 140% the price of cheese. When butter gets that high, it’s a real money loser .

Ted Jacoby III: Joe, one last question you before we bring our friends from Cefetra into the conversation.

 Milk production is up, percentage of butterfat in the milk is up. Looks like we’re gonna have even more butterfat next year than the excessive amount we had this year. What do you anticipate from this butter market over the next 3, 6, 9 months? Are we at the bottom now?

Can we go lower?

Joe Maixner: We probably need to go lower before we stabilize and rebound. I personally don’t think that we see a two in front of the butter price before second half of twenty six.

Ted Jacoby III: that’s an answer I can live with. I think dairy farmers can live with it probably at this point, too.

They’d love to see a 2 in front of the butter market. Having said that, it’s safe to say we’re swimming in butter right now. We’re swimming in butterfat on this side of the pond. Let’s switch to the other side of the pond. We’re seeing record-high butter prices as recently as nine months ago.

[00:05:00 ] What’s happened since what’s going on right now in Europe when it comes to butter?

Martijn Goedhart: I think what’s happened here is that we were underwhelmed by the output of milk in general in the first half of the year, driven by the aftermath of some diseases.

That pushed prices up to record high levels, especially on the fat side. At some point in time, we saw the spread between EU and U.S. butter widening. That also made us buy some U.S. butter for import into Europe. And that coincided with production going up, driven by good margins and cheese hampering a bit.

That basically gave us our perfect storm. In the last three months, we lost about €2,000 of value per ton on the butter, which is huge. And this is still lingering on because just like in the U.S., we almost call it like a second peak in terms of output because some cows started calving later due to the blue tongue aftermath. So, we definitely have more milk than in a normal season. This caught us a bit by surprise. That also means that now the liquids are trading below the commodity equivalent, which is also unusual for the time [00:06:00 ] of year.

I feel like we’re in a perfect supply storm at the moment because it doesn’t matter which region you look at, everything is looking absolutely perfect, and not even only from the milk side, but also from the bulk commodity side and vegetable commodities.

That also doesn’t help the sentiment, makes buyers wait, makes suppliers look for buyers because they also don’t want to store it. Supply pressure is still here. We stabilized a bit. But that’s what happened, basically.

Ted Jacoby III: So, if I’m hearing you correctly, in Europe right now, we’re getting perfect weather. Grain feed supplies are really good, therefore, we’re producing more milk. By the way, the same thing’s happening here in the U.S., and I’m pretty sure New Zealand’s in a pretty similar boat. They’re starting up their season and it’s going pretty smoothly so far.

 We’re gonna have a lot of milk this year. A lot of milk solids, a lot of butterfat. That also means we’re gonna have a lot of grain, so we’re gonna be able to feed all the cows, all the