The Rise of Butterfat: Genetics, Supply, and Price Pressure

Not long ago, milk was just milk. But these days, its components are rapidly evolving, particularly its butterfat content.

Thanks to advances in dairy cow genetics and feeding strategies, butterfat levels in American milk are rising. For producers, handlers, and processors, this change represents both an opportunity and a challenge.

The Good: Higher butterfat content implies more cream, more butter, and potentially greater product yield.

The Bad: Higher butterfat content complicates supply and demand dynamics in an already volatile market.

The Question: What is really happening in the butterfat economy and where is it heading?

Butterfat isn’t just on the rise; it’s booming.

In the early 2000s, the annual percentage of butterfat as a component of milk remained quite stable. But since 2015, the butterfat percentage as a component of milk has increased each year.

This year, we have observed a continuous increase in butterfat. In December 2024, data for U.S. markets showed a record 4.42% butterfat. In January 2025, this was surpassed by 4.43%.

Factors Behind the Phenomenon

One reason? Butterfat is easier to breed and feed for than any other component, and breeding programs have increasingly prioritized it over volume.

Nate Zwald, COO of Progenco, noted the impact of genetic advancements such as genomic technology and sexed semen on the industry.

Dairy producers implement feeding strategies to enhance butterfat production:

• Enriching diets with high-oleic soybeans.
• Supplementing with live yeast.
• Balancing unsaturated fatty acids.

These advancements allow American herds to produce richer milk without sacrificing production.

Market Dilemma: More Fat, Lower Prices?

Macro-level, the situation is complex. As butterfat supply increases faster than demand, prices face downward pressure, notably on the Chicago Mercantile Exchange (CME), despite strong export interest.