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Cheese and Butter Futures Soar With Omicron Hitting Dairy Plants

Derivatives for dairy products from whey to milk powder are on the rise

A customer shops at a grocery store in San Francisco.

A customer shops at a grocery store in San Francisco.

Photographer: David Paul Morris/Bloomberg

A spike in prices for U.S. dairy products has hit futures markets, which means more expensive cheese and butter for Americans may be coming.

Omicron is one culprit. Manufacturers are struggling, with the Covid-19 virus variant causing more absenteeism at dairy plants. There’s also a more long-term trend at work: milk production in the U.S. is dropping. It’s getting too expensive to feed cows with grain costs soaring, so farmers are shrinking their herds and sending animals to slaughter. For the cows that remain, they’re getting fed less, which means they’ll produce less milk. Rising labor and energy costs are also making it tougher for dairies to net profits.