U.S. Dairy Cold Storage Update – Oct ’16
Executive Summary
U.S. cold storage figures provided by USDA were recently updated with values spanning through Sep ’16. Highlights from the updated report include:
• Sep ’16 U.S. butter stocks continued to decline seasonally but remained significantly higher on a YOY basis, finishing 43.5% above the previous year’s level and reaching a 23 year seasonal high.
• Sep ’16 U.S. cheese stocks also remained higher on a YOY basis, finishing up 7.4% to a record seasonal high.
Additional Report Details
Butter – Stocks Reach a 23 Year Seasonal High, Finish up 43.5% YOY
According to USDA, Sep ’16 U.S. butter stocks of 269.2 million pounds declined 15.6% MOM seasonally but remained significantly higher on a YOY basis, finishing up 43.5% to a 23 year high for the month of September. The monthly YOY increase in butter stocks was the 18th experienced in a row while the YOY gain was the third largest experienced over the period on a percentage basis. The August – September seasonal decline in butter stocks of 49.6 million pounds, or 15.6%, was larger than the ten year average August – September decline of 22.5 million pounds, or 10.7%, however.
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 7.4% YOY
Sep ’16 U.S. cheese stocks of 1.24 billion pounds declined 0.3% MOM but remained 7.4% higher on a YOY basis, finishing at a record high for the month of September. The monthly YOY increase in cheese stocks was the 23rd experienced in a row while the MOM decline was smaller than the typical seasonal August – September drawdown on a percentage basis. Cheese stocks have declined by an average of 1.7% from August – September 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 weak through Sep ’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 – September 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, Sep ’16 U.S. butter stocks of 269.2 million pounds declined 15.6% MOM seasonally but remained significantly higher on a YOY basis, finishing up 43.5% to a 23 year high for the month of September. The monthly YOY increase in butter stocks was the 18th experienced in a row while the YOY gain was the third largest experienced over the period on a percentage basis. The August – September seasonal decline in butter stocks of 49.6 million pounds, or 15.6%, was larger than the ten year average August – September decline of 22.5 million pounds, or 10.7%, however.
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 7.4% YOY
Sep ’16 U.S. cheese stocks of 1.24 billion pounds declined 0.3% MOM but remained 7.4% higher on a YOY basis, finishing at a record high for the month of September. The monthly YOY increase in cheese stocks was the 23rd experienced in a row while the MOM decline was smaller than the typical seasonal August – September drawdown on a percentage basis. Cheese stocks have declined by an average of 1.7% from August – September 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 weak through Sep ’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 – September 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.