Looking for bright spots in this year’s U.S. dairy outlook is increasingly challenging.

Butter continues to do outsized work in supporting milk prices, holding firm at around $2.40/lb, while other key product prices sag. The butterfat value of producer milk checks has averaged an estimated 58 percent of total milk checks since last August, compared to a more normal 40 percent during 2020–2021.

Retail price inflation has dropped dramatically this year for all dairy products tracked by the Bureau of Labor Statistics (BLS), with the Consumer Price Index (CPI) for all dairy products just 2.7 percent higher in June than a year earlier, a potential boon to demand. The overall Consumer Price Index measuring general inflation was 3 percent higher in June than a year ago. Domestic commercial use of milk in all products, meanwhile, is up over a year ago by more than 3 percent on a total solids milk equivalent basis, according to USDA.