Extreme heat puts 'udder' toll on butter production ahead of holidays

Butter is a mainstay for Thanksgiving and might be part of a problem that people face when they head to the grocery store in search of the impacted holiday staple.

Beware of butter as you prepare to get your turkey and all the fixings. It will cost you to dress your biscuits.

With a year-over-year increase of 26.7%, the average cost of a pound of butter now sits at $4.70 - a dollar more than last year. 

The extreme heat is just one of many factors in the drastic drop in butter production leading to the price spike. 

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Rising energy, feed and labor costs have impacted the production of milk, butter and other dairy products, according to Scott Grawe with Iowa State University's Supply Chain Management Department.

"And it's certainly leading to higher prices," he said.

Grawe said butter is still available in retail stores, but it's certainly not in inventory the way it has been in the past.

The US Department of Agriculture reports the amount of butter in stores is down 22% compared to last year. The reason is due to various oil substitutes and extreme summer heat.

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"The war in Ukraine has really affected and played havoc with some of the other cooking oils, sunflower oil, vegetable oil and so forth," Grawe said. "And a lot of those go into the production of margarine, which is an alternative to butter."

As people gravitate toward butter and not other cooking oils, Grawe adds, it's going to drive the demand further up, which will eat into inventories.

The U.S. also had one of the hottest June's on record, July over performed, and August was also exceptionally hot as major cities all across America set heat records. It's a pattern that could repeat with butter season after season.

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"If weather is kind of back to a little bit more reasonable levels, we can see increase in butter production," Grawe said. "But from a supply and demand standpoint, it's always hard to catch up if the demand continues to outpace supply."

If the availability and pricing of butter alternatives continue to stay high, Grawe said it's going to make it more difficult to catch up as people flock to butter as their alternative.

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