Executive Summary U.S. dairy product production figures provided by USDA were recently updated with values spanning through Oct ’16. Highlights from the updated report include:

• Oct ’16 U.S. butter production declined on a YOY basis for the second consecutive month, finishing down 3.6% to a six year seasonal low.
• U.S. cheese production remained strong during Oct ’16, increasing on a YOY basis for the 43rd consecutive month and finishing at a record high volume for the month of October.
• Combined production of U.S. nonfat dry milk and skim milk powder remained sharply higher on a YOY basis during Oct ’16, increasing by 15.5% and finishing at a record seasonal high.

Additional Report Details Butter – Production Declines on a YOY Basis for the Second Consecutive Month, Finishes Down 3.6% According to USDA, Oct ’16 U.S. butter production of 143.0 million pounds increased 2.3% MOM on a daily average basis but remained lower on a YOY basis for the second consecutive month, finishing down 3.6%. The YOY decline in butter production was the largest experienced in over a year and a half on a percentage basis. Overall, butter production declined to a six year low for the month of October while the seasonal increase in butter production was significantly less than the ten year average September – October increase of 7.5%. YOY declines in butter production were widespread and led by the Atlantic U.S., which fell 9.2%. Butter production also declined by 3.8% in the Western U.S. and 2.0% in the Central U.S. throughout the month. ’15-’16 annual butter production finished up 3.4%, reaching a new record annual high. Cheese – Production Reaches Record High for the Month of October, Finishes up 0.5% YOY Oct ’16 total U.S. cheese production of 1.03 billion pounds increased on a YOY basis for the 43rd consecutive month, finishing 0.5% above the previous year and reaching a new record high production level for the month of October. Cheddar cheese production of 279.5 million pounds increased 0.2% YOY while other-than-cheddar cheese production increased 0.6% YOY throughout the month. The YOY increase in cheddar cheese production was the first experienced throughout the past six months. ’15-’16 annual cheese production increased 2.3% to a new record annual high, despite cheddar cheese production declining by 0.1% throughout the period. Dry Whey – Production Increases to an Eight Year Seasonal High, Finishes up 9.0% YOY Oct ’16 U.S. dry whey production of 81.9 million pounds increased 7.3% MOM on a daily average basis and 9.0% YOY, finishing at an eight year seasonal high. Combined whey protein concentrate (WPC) and whey protein isolate (WPI) production remained lower on a YOY basis, however, declining by 7.5% throughout the month. Combined WPC and WPI production has declined on a YOY basis over 22 of the past 23 months through October. Combined dry whey, WPC and WPI production increased on a YOY basis for the first time in nine months during Oct ’16, finishing up 2.5%. ’15-’16 annual dry whey production finished up 3.3% YOY, however combined production of dry whey, WPC and WPI declined 0.8%. NFDM/SMP – Combined Production Remains Sharply Higher, Finishes up 15.5% YOY Oct ’16 U.S. nonfat dry milk (NFDM) production of 139.6 million pounds increased 7.4% MOM on a daily average basis and 18.0% YOY, finishing at a record seasonal high. The YOY increase in NFDM production was only the second experienced throughout the past 13 months and the largest experienced in the past year and a half on a percentage basis. Skim milk powder (SMP), which is more suited to the requirements of most global markets, increased on a YOY basis for the 12th consecutive month, as production of 42.9 million pounds finished 8.1% above the previous year. Overall, Oct ’16 combined production of NFDM and SMP increased 15.5% on a YOY basis, finishing at a record seasonal high. The YOY growth rate in combined production was the largest experienced in the past 23 months. ’15-’16 annual combined production of NFDM and SMP finished 2.3% lower as a 8.4% decline in NFDM production more than offset a 24.1% increase in SMP production. Overall, nonfat dry milk production increased most significantly YOY on a percentage basis during Oct ’16, followed by dry whey and skim milk powder production, while butter production declined most significantly on a percentage basis throughout the month.