MD_DA440 DA MD DA440 BUTTER - WEST MADISON, WI. October 7, 2015 (REPORT 40) WEST BUTTER West butter makers report cream supplies are currently adequate to meet their needs for churning. Butter production is active as manufacturers try to capitalize on the strong seasonal demand for butter and current prices. Much of the production is currently focused on making print butter. Domestic butter demand is strong and is anticipated to continue through the Q4 holiday baking season. Inventories are trending lower as butter manufacturers draw butter out to meet consumer demand. Industry contacts state the recent price rise to a record high on the CME and subsequent drop-off was a result of buyers' reactions to seeming tightness of butter inventories. High cream multiples prompting cream sales away from butter production earlier in the year, lower YTD butter production, solid domestic butter demand, and a large draw down of butter inventories in August are being discussed as contributing factors that pushed up butter prices. Once the initial fervor subsided, prices fell. Industry contacts suggest that current pricing is now more comfortable. The DMN National Retail Report - Dairy for the week of October 2 - 8, found that the U.S. weighted average advertised price of 1 pound butter is $3.32, up $.08 from one week ago but down $.36 from one year ago. In the Southwest, the weighted average advertised price for 1 pound butter was $3.43 with a price range of $1.99 - $5.49, and in the Northwest, $3.60 with a price range of $2.99 - $3.99. This week, a cooperative export assistance program accepted requests for 6.515 million pounds of butter. Dairy Products (NASS) reports U.S. butter production during August 2015, 128.6 million pounds, was 1.2% lower than August last year and 3.5% lower than July 2015. U.S. cumulative 2015 butter production through August was 1.7% lower than the same period last year. In the West, total August butter production was 0.3% higher than August last year. Bulk butter pricing in the West this week is 4 cents under market to 3 cents above, based on the CME Group with various time frames and averages used. The CME Group September 2015 monthly average price for AA butter, $2.6690, is up from the August monthly average of $2.1542, but down from the September 2014 monthly average of $2.9740. The Grade AA butter price at the CME Group on Wednesday closed at $2.3700, down $.1400 from a week ago. 2015 U.S. Butter and Milkfat Exports (USDA-FAS) 2015 Exports % Change From (Million Lb.) 1 Year Ago August Total 5.3 - 34 TOTAL, JAN - AUGUST 40.3 - 70 1 Saudi Arabia 16.5 - 46 2 Mexico 7.6 + 21 3 Canada 4.4 - 6 4 South Korea 2.7 - 10 5 Iran 1.2 - 91 1530CT Mike.Bandli@ams.usda.gov 608.557.7010 USDA/AMS/Dairy Market News, Madison, Wisconsin Dairy Market News website: http://www.ams.usda.gov/market-news/dairy Dairy Market News database portal: http://www.marketnews.usda.gov/mnp/da-home