After a $0.90 per lb collapse for cash butter during Q1—brought on by building inventories and declining restaurant and food service demand in the wake of COVID-19—pricing has rallied by 20 percent over the past 30 days. This may be a signal that prices had become overextended and oversold.
And news to report from the cold storage report: Stocks of butter climbed to 369 million pounds, a whopping 27 percent above the prior year and a new record. Cheese stocks also increased and currently sit at 6 percent above April 2019 levels. Heavy inventories of dairy products may hold the current bull rally in check, but buyers should take advantage of any sharp selloffs.