Industry Supports New Butter Grading Standards

Lizzy Schultz

ABI Logo_FINAL_10.24.13 New grading standards at the Chicago Mercantile Exchange (CME) have ended a rule requiring butter sellers to provide a USDA Grading certificate unless requested to do so by a buyer.

The change comes following efforts from a task force created in 2015 by the American Butter Institute (ABI), working in close partnership with CME while redrafting the rules and gaining industry support.

As of February 1st, sellers can provide a Certificate of Analysis (COA) in lieu of a Grade AA certificate as acceptable documentation for deliverable loads of butter in the spot market. Butter sold with a COA will continue to meet the grading standards of a Grade AA certificate.

CME and ABI believe the change will allow more eligible loads of butter to be transacted in the spot market.

“The previous grading requirements have been burdensome for some market participants, which means less butter is offered on the CME,” said Irv Holmes, ABI President. “This evolution of document requirements moves the butter industry forward and reduces unnecessary costs. It’s a win-win for buyers and sellers, and in an era of increasing price volatility, this change will aid in the efficient marketing of butter.”

Butter, National Milk, Policy, usda