Butter has never been this expensive as a limited world supply has buyers scrambling before the holiday baking season later this year.

Prices hit an average of $7,350 per metric ton on the latest Global Dairy Trade auction, surpassing a previous peak of $7,086 in 2022. The auction, which holds its next sale Tuesday, helps set the direction for dairy prices, including the Chicago futures market.

Record butter prices come as world dairy processors have been devoting more milk to making cheese, demand for which has been soaring for foods like pizza. Butter, meanwhile, has enjoyed a demand tailwind since consumers started stockpiling more at home following the Covid-19 pandemic. Butter buyers now are making sure they have enough to meet demand for the baking surge for year-end holiday meals and desserts.

“US manufacturers haven’t invested in butter capacity in many years,” said Mike Lynch, who trades physical supplies for Burt Lewis International in Chicago. “All of the capital dollars are going toward cheese while butter has been the star of the dairy category for a few years now.”

In the US, milk is relatively tight as output has been under pressure from the highly virulent bird flu virus that recently made the jump to dairy cows.

The price of butter is hitting food and confectionery makers already facing high costs for cocoa after prices for beans hit a record earlier this year. And even as overall inflation in food has moderated, goods such as orange juice and robusta coffee have skyrocketed this year.

The record butter price “highlights desperation from global buyers that are running into a tight fat environment throughout the Northern Hemisphere summer and are willing to pay a premium for nearby delivery,” said Alyssa Badger, vice president of global operations and insights at brokerage Highground Dairy.

Relief may be coming soon, at least temporarily. For the past two years, butter prices have slumped at Global Dairy Trade’s auctions in early July.