U.S. Dairy Cold Storage Update – Sep ’16
Executive Summary
U.S. cold storage figures provided by USDA were recently updated with values spanning through Aug ’16. Highlights from the updated report include:
• Aug ’16 U.S. butter stocks declined seasonally but remained significantly higher on a YOY basis, finishing 51.9% above the previous year’s level and reaching a 23 year seasonal high.
• Aug ’16 U.S. cheese stocks also remained higher on a YOY basis, finishing up 6.5% to a record seasonal high.
Additional Report Details
Butter – Stocks Reach a 23 Year Seasonal High, Finish up 51.9% YOY
According to USDA, Aug ’16 U.S. butter stocks of 322.2 million pounds declined 3.2% MOM from the 22 year high experienced during Jul ’16 but remained significantly higher on a YOY basis, finishing up 51.9% to a 23 year high for the month of August. The monthly YOY increase in butter stocks was the 17th experienced in a row while the YOY gain was the largest experienced in over four years on a percentage basis.
The July – August seasonal decline in butter stocks of 10.6 million pounds, or 3.2%, was significantly smaller than the ten year average July – August decline of 26.6 million pounds, or 11.3%. 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 Finish at a Record Seasonal High, Finish up 6.5% YOY
Aug ’16 U.S. cheese stocks of 1.24 billion pounds declined 2.5% MOM from the record high experienced during the previous month but remained 6.5% higher on a YOY basis, finishing at a record high for the month of August. The monthly YOY increase in cheese stocks was the 22nd experienced in a row while the MOM decline was consistent with historical seasonal drawdowns on a percentage basis. Cheese stocks have declined by an average of 2.3% from July – August over the past ten years. Cheese stocks have remained higher on a YOY basis in recent months as milk production has strengthened in Midwestern cheese producing states 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 22nd consecutive month during Aug ’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 – August 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, Aug ’16 U.S. butter stocks of 322.2 million pounds declined 3.2% MOM from the 22 year high experienced during Jul ’16 but remained significantly higher on a YOY basis, finishing up 51.9% to a 23 year high for the month of August. The monthly YOY increase in butter stocks was the 17th experienced in a row while the YOY gain was the largest experienced in over four years on a percentage basis.
The July – August seasonal decline in butter stocks of 10.6 million pounds, or 3.2%, was significantly smaller than the ten year average July – August decline of 26.6 million pounds, or 11.3%. 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 Finish at a Record Seasonal High, Finish up 6.5% YOY
Aug ’16 U.S. cheese stocks of 1.24 billion pounds declined 2.5% MOM from the record high experienced during the previous month but remained 6.5% higher on a YOY basis, finishing at a record high for the month of August. The monthly YOY increase in cheese stocks was the 22nd experienced in a row while the MOM decline was consistent with historical seasonal drawdowns on a percentage basis. Cheese stocks have declined by an average of 2.3% from July – August over the past ten years. Cheese stocks have remained higher on a YOY basis in recent months as milk production has strengthened in Midwestern cheese producing states 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 22nd consecutive month during Aug ’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 – August 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.