Butter – Lower Production, Tight Stocks Continue According to USDA, U.S. butter production continued to lag behind last year’s production through April. Butter production has declined YOY for six straight months, with April ’14 U.S. butter production ending 4.9% behind ’12-’13 production. ’13-’14 YTD butter production is 4.3% lower than the previous year through the first seven months of the production season. Lower production has resulted in a significant decline in domestic butter stocks. Butter stocks declined to a 24 month low in December before rising seasonally from January to March. April ’14 butter stocks ended 43.8% below the previous year’s level. Cheese – Total Monthly Production Increases to All-Time High, Cheddar Production Rebounds YOY U.S. cheese production increased YOY for the 13^th straight month, as April ’14 production registered a 2.2% YOY gain. April ’14 U.S. cheese production set a new all-time monthly production high on a daily average basis. Cheddar cheese increased YOY for the first time in six months, increasing 1.0% YOY and 4.9% MOM. ’13-’14 YTD total cheese production is 1.8% higher than the previous year through the first seven months of the production season. Cheddar cheese remains down 0.9% YTD through April. Dry Products – Dry Whey YOY Production Declines Continue, Powder Production Increases U.S. dry whey production continues to trail last year’s production levels, with April ’14 production down 12.8% YOY, but increased on a MOM basis. Dry whey production has rebounded off of lows experienced earlier this year, with production up 7.6% MOM in April. In addition, March ’14 U.S. dry whey production was revised 8.6% higher than previously reported. Despite the MOM gains, YTD U.S. dry whey production remains down 13.0%. U.S. dry whey production has declined YOY in 11 of the past 12 months with an average YOY decline of 8.9% as U.S. manufacturers continue to shift toward higher-value whey protein products including whey protein concentrates (WPC) and whey protein isolates (WPI). WPC and WPI production increased 13.0% YOY and 8.4% YOY, respectively in April ’14. Total April ’14 dry whey, WPC, and WPI production declined by 3.9% YOY. Despite recent MOM increases in production, April ’14 U.S. dry whey stocks were down 6.9% from last month, at 55.6 million lbs. Although April ’14 dry whey stocks were down 18.8% YOY, stocks were 2.6% higher than the five year average April dry whey stocks. April ’14 U.S. NFDM production declined 1.2% YOY but was 32.0% above the five year average April NFDM production. April ’14 U.S. SMP production increased 22.8% YOY, rebounding from YOY declines in February-March ’14. April ’14 combined production of NFDM and SMP was 3.6% higher than the previous year. SMP production as a percentage of total NFDM and SMP production experienced record highs early in the ’13-’14 production season, but declined significantly in February and March. SMP production is more suited to the requirements of most global markets; however plants typically convert milk into NFDM during periods of strong production because it does not have to be standardized to 34% protein. California, the leading powder producing state in the U.S., increased milk production by 4.4% YOY and NFDM production by 6.4% YOY in February-March ’14. In comparison, California milk production increased only 1.5% YOY in April ’14 and California NFDM production decreased 8.3% YOY. Excluding California, April ’14 NFDM production was up 3.5% YOY. Recent increased NFDM production has led to a significant increase in stocks. April ’14 U.S. NFDM stocks of 239.1 million lbs are at an all-time record high. April NFDM stocks were up 11.7% from last month, and 15.2% from last year. See the table below for a summary of key U.S. dairy product production in April ’14.