U.S. Dairy Cold Storage Update – Aug ’16
Executive Summary
U.S. cold storage figures provided by USDA were recently updated with values spanning through Jul ’16. Highlights from the updated report include:
• Jul ’16 U.S. butter stocks continued to increase seasonally while also remaining higher on a YOY basis, finishing 31.0% above the previous year’s level and reaching a new 22 year high.
• Jul ’16 U.S. cheese stocks also remained higher on a YOY basis, finishing up 9.9% to a new record high figure.
Additional Report Details
Butter – Stocks Reach a New 22 Year High, Finish up 31.0% YOY
According to USDA, Jul ’16 U.S. butter stocks of 333.1 million pounds increased 1.5% MOM while also remaining significantly higher on a YOY basis, finishing up 31.0% to a new 22 year high. The monthly YOY increase in butter stocks was the 16th experienced in a row.
The June – July seasonal increase in butter stocks was the first experienced in the past 12 years. U.S. butter stocks typically reach their seasonal peak in May, followed by seasonal drawdowns until lows are reached during the winter months. The most recent seasonal drawdown in butter stocks of 132.1 million pounds was 11.7% less than the previous three year average seasonal drawdown as weak export demand outweighed increases in domestic consumption. U.S. butterfat exports had declined YOY for 20 consecutive months through Dec ’15.
Cheese – Stocks Reach a New Record High Figure, Finish up 9.9% YOY
Jul ’16 U.S. cheese stocks of 1.28 billion pounds increased 2.1% MOM and 9.9% YOY, finishing at a new record high figure. The monthly YOY increase in cheese stocks was the 21st experienced in a row. Cheese stocks have remained higher on a YOY basis in recent months as milk production within Midwestern cheese producing states has remained strong while weakness in cheese export markets has continued. Strong cheese production has been partially offset by continued strong domestic demand, however cheese exports remained lower YOY for the 21st consecutive month during Jun ’16.
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 November – July 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, Jul ’16 U.S. butter stocks of 333.1 million pounds increased 1.5% MOM while also remaining significantly higher on a YOY basis, finishing up 31.0% to a new 22 year high. The monthly YOY increase in butter stocks was the 16th experienced in a row.
The June – July seasonal increase in butter stocks was the first experienced in the past 12 years. U.S. butter stocks typically reach their seasonal peak in May, followed by seasonal drawdowns until lows are reached during the winter months. The most recent seasonal drawdown in butter stocks of 132.1 million pounds was 11.7% less than the previous three year average seasonal drawdown as weak export demand outweighed increases in domestic consumption. U.S. butterfat exports had declined YOY for 20 consecutive months through Dec ’15.
Cheese – Stocks Reach a New Record High Figure, Finish up 9.9% YOY
Jul ’16 U.S. cheese stocks of 1.28 billion pounds increased 2.1% MOM and 9.9% YOY, finishing at a new record high figure. The monthly YOY increase in cheese stocks was the 21st experienced in a row. Cheese stocks have remained higher on a YOY basis in recent months as milk production within Midwestern cheese producing states has remained strong while weakness in cheese export markets has continued. Strong cheese production has been partially offset by continued strong domestic demand, however cheese exports remained lower YOY for the 21st consecutive month during Jun ’16.
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 November – July 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.