U.S. Dairy Cold Storage Update – May ’15
Butter – Stocks Increase Sharply but Remain Below Three Year Average Figures
According to USDA, Apr ’15 U.S. butter stocks increased sharply, with month ending stocks of 230.4 million pounds finishing up 25.0% MOM and 23.3% YOY. The MOM increase of 46.1 million pounds was significantly more than the ten year average Mar –Apr seasonal build of 25.8 million pounds, although seasonal builds of 45.9 million pounds and 54.7 million pounds were experienced in Apr ’12 and Apr ’13. Despite the sharp increase, Apr ‘15 butter stocks remain 7.9% below the three year average April butter stocks.
The most recent seasonal drawdown in butter stocks of 104.7 million pounds was less than half of the prior year’s seasonal drawdown due to a significant reduction in export demand. Throughout the period, YOY U.S. butterfat exports declined by 89.1 million pounds, or 55.9%, as domestic butter prices traded at a significant premium to international butter prices. Despite U.S. butter prices converging downward towards international prices, domestic butterfat exports remained weak in Mar ’15, down 88.6% YOY.
Cheese – Stocks Remain Higher on YOY Basis for Sixth Consecutive Month
Apr ’15 U.S. cheese stocks of 1.08 billion pounds finished up 1.5% MOM and 4.2% YOY. The monthly YOY increase in cheese stocks was the sixth in a row after 11 consecutive months of YOY declines were experienced from Dec ’13 to Oct ’14. Cheese stocks have remained higher YOY in recent months as milk production has strengthened in Midwestern cheese producing states while weakness in cheese export markets has continued. Total cheese stocks remained higher YOY despite a 1.4% YOY decline in American cheese stocks, the largest decline experienced in the past seven months. Although cheese stocks remain higher YOY, seasonal builds continue to remain below historical norms. The Apr ’15 MOM build of 15.6 million pounds, or 1.5%, remains below the ten year average Mar – Apr build of 18.9 million pounds, or 2.1%. Cheese production has remained strong but the additional supply has been partially offset by continued strong domestic demand. Cheese exports remain lower YOY but increased sharply MOM in Feb ’15.
U.S. cheese stocks typically exhibit a smaller degree of MOM and YOY variation than U.S. butter stocks. Cheese stocks do not have as large of a seasonal build as butter stocks, with the five year average Nov – Jul seasonal build in cheese stocks representing a 12.7% increase in stocks vs. a 121.1% increase in butter stocks. The reduced seasonality exhibited in U.S. cheese stocks has led to less volatile YOY variation, with cheese stocks having a five year average absolute YOY change of 5.3% compared to 26.3% for U.S. butter stocks.
According to USDA, Apr ’15 U.S. butter stocks increased sharply, with month ending stocks of 230.4 million pounds finishing up 25.0% MOM and 23.3% YOY. The MOM increase of 46.1 million pounds was significantly more than the ten year average Mar –Apr seasonal build of 25.8 million pounds, although seasonal builds of 45.9 million pounds and 54.7 million pounds were experienced in Apr ’12 and Apr ’13. Despite the sharp increase, Apr ‘15 butter stocks remain 7.9% below the three year average April butter stocks.
The most recent seasonal drawdown in butter stocks of 104.7 million pounds was less than half of the prior year’s seasonal drawdown due to a significant reduction in export demand. Throughout the period, YOY U.S. butterfat exports declined by 89.1 million pounds, or 55.9%, as domestic butter prices traded at a significant premium to international butter prices. Despite U.S. butter prices converging downward towards international prices, domestic butterfat exports remained weak in Mar ’15, down 88.6% YOY.
Cheese – Stocks Remain Higher on YOY Basis for Sixth Consecutive Month
Apr ’15 U.S. cheese stocks of 1.08 billion pounds finished up 1.5% MOM and 4.2% YOY. The monthly YOY increase in cheese stocks was the sixth in a row after 11 consecutive months of YOY declines were experienced from Dec ’13 to Oct ’14. Cheese stocks have remained higher YOY in recent months as milk production has strengthened in Midwestern cheese producing states while weakness in cheese export markets has continued. Total cheese stocks remained higher YOY despite a 1.4% YOY decline in American cheese stocks, the largest decline experienced in the past seven months. Although cheese stocks remain higher YOY, seasonal builds continue to remain below historical norms. The Apr ’15 MOM build of 15.6 million pounds, or 1.5%, remains below the ten year average Mar – Apr build of 18.9 million pounds, or 2.1%. Cheese production has remained strong but the additional supply has been partially offset by continued strong domestic demand. Cheese exports remain lower YOY but increased sharply MOM in Feb ’15.
U.S. cheese stocks typically exhibit a smaller degree of MOM and YOY variation than U.S. butter stocks. Cheese stocks do not have as large of a seasonal build as butter stocks, with the five year average Nov – Jul seasonal build in cheese stocks representing a 12.7% increase in stocks vs. a 121.1% increase in butter stocks. The reduced seasonality exhibited in U.S. cheese stocks has led to less volatile YOY variation, with cheese stocks having a five year average absolute YOY change of 5.3% compared to 26.3% for U.S. butter stocks.