Executive Summary

U.S. dairy commercial disappearance figures provided by USDA were recently updated with values spanning through Jun ’18. Highlights from the updated report include:

• Jun ’18 U.S. commercial disappearance for milk used in all products increased 1.5% YOY on a milk-fat basis and 0.3% YOY on a skim-solids basis. Domestic demand increased 0.8% YOY on a milk-fat basis, finishing higher for the first time in the past four months, but declined 3.0% YOY on a skim-solids basis, remaining lower for the fourth consecutive month.
• Jun ’18 U.S. butter and cheese commercial disappearance increased on a YOY basis throughout the month, finishing up 3.5% and 1.7%, respectively. U.S. commercial disappearance of dry whey and nonfat dry milk/skim milk powder finished lower on a YOY basis, however, declining by 7.4% and 4.4%, respectively.
• U.S. fluid milk sales finished lower on a YOY basis for the 11^th time in the past 12 months during May ’18, declining by 3.2%. Sales of fat-free milk remained particularly weak, declining by 7.9% YOY throughout the month.

Additional Report Details

All Milk – Disappearance Finishes Higher YOY on Both a Milk-Fat and Skim-Solids Basis

According to USDA, Jun ’18 U.S. commercial disappearance for milk used in all products on a milk-fat basis increased YOY for the fifth time in the past six months, finishing up 1.5% to a record seasonal high for the month of June. Domestic demand increased 0.8% YOY on a milk-fat basis throughout the month, finishing higher for the first time in the past four months.

Jun ’18 U.S. commercial disappearance for milk used in all products finished higher on a skim-solids basis increased YOY for the seventh consecutive month, finishing up 0.3%. The increase in total skim-solids disappearance occurred despite domestic disappearance declining 3.0% YOY, finishing lower for the fourth consecutive month.

Butter – Disappearance Increases 3.5% YOY on Strong Domestic Demand

Jun ’18 U.S. butter commercial disappearance increased 3.5% YOY, finishing higher on a YOY basis for the first time in the past four months. A 3.8% YOY increase in domestic butter demand more than offset a 3.4% YOY decline in export demand experienced throughout the month. ’16-’17 annual U.S. butter disappearance finished 3.4% higher YOY, reaching a three year high, as domestic butter disappearance increased 2.2%, reaching the highest figure on record. ’17-’18 YTD disappearance has increased an additional 1.8% throughout the first three quarters of the production season.

Jun ’18 U.S. total butter disappearance figures slightly outpaced combined production and import figures, resulting in stocks declining from the previous month but remaining at a 25 year seasonal high for the month of June. The monthly decline in butter stocks was the first experienced throughout the past seven months. U.S. butter stocks typically decline seasonally throughout the second half of the calendar year, reaching seasonal lows throughout the months of November and December.

Cheese – Disappearance Increases YOY for the Tenth Time in the Past 11 Months, Finishes up 1.7%

Jun ’18 U.S. cheese commercial disappearance increased 1.7% YOY, finishing higher on a YOY basis for the tenth time in the past 11 months. American cheese disappearance increased 1.4% YOY while other-than-American cheese disappearance finished 1.9% higher throughout the month. Total domestic cheese demand increased 1.0% YOY throughout the month while export volumes finished 11.8% higher. ’16-’17 annual U.S. cheese disappearance increased 3.7% to a record annual high as domestic demand increased 2.8% to a record high while export demand finished up 20.5%. ’17-’18 YTD disappearance has increased an additional 2.4% throughout the first three quarters of the production season.

Jun ’18 U.S. cheese combined production and import figures outpaced total disappearance figures, resulting in stocks increasing from the previous month, finishing at a new monthly record high figure. U.S. cheese stocks typically increase seasonally throughout the first half of the calendar year.

Dry Whey – Disappearance Declines YOY for the Second Consecutive Month, Finishes Down 7.4%

Jun ’18 U.S. dry whey commercial disappearance declined 7.4% YOY, finishing lower on a YOY basis for the second consecutive month and reaching a seven month low overall. Domestic dry whey demand declined 23.5% YOY throughout the month, more than offsetting a 14.0% YOY increase in export volumes. ’16-’17 annual U.S. dry whey disappearance declined 2.0% YOY from the four year high experienced during the previous year as a 16.8% decline in domestic demand more than offset a 22.0% increase in export demand. ’17-’18 YTD disappearance has rebounded by 15.0% throughout the first three quarters of the production season, despite the most recent declines.

Jun ’18 U.S. dry whey combined production and import figures outpaced total disappearance figures, resulting in stocks increasing for the second consecutive month.

WPC – Disappearance Increases to a Record Seasonal High, Finishes up 12.7% YOY

Jun ’18 U.S. whey protein concentrate (WPC) commercial disappearance increased 12.7% YOY, finishing at a record seasonal high for the month of June. Domestic WPC demand increased 19.7% YOY throughout the month while export volumes finished 5.3% higher. ’16-’17 annual U.S. WPC disappearance declined 5.5% YOY from the record high levels experienced throughout the previous production season as a 17.3% decline in domestic demand more than offset a 5.5% increase in export demand. ’17-’18 YTD disappearance has rebounded by 6.9% throughout the first three quarters of the production season, however.

Jun ’18 disappearance of U.S. WPC outpaced total production and import volumes, resulting in stocks declining for the fifth consecutive month and reaching a 15 month low overall. U.S. WPC stocks had reached a record monthly high during Jan ’18, prior to declining throughout the past five months.

NFDM/SMP – Disappearance Declines YOY on Weak Domestic Demand, Finishes Down 4.4%

Jun ’18 U.S. nonfat dry milk (NFDM) and skim milk powder (SMP) commercial disappearance declined 4.4% YOY, finishing lower on a YOY basis for the first time in the past three months. Domestic NFDM/SMP demand declined 38.7% YOY throughout the month, more than offsetting a 24.1% YOY increase in export demand. ’16-’17 annual U.S. NFDM/SMP disappearance declined 0.3% YOY to a three year low as a 14.6% decline in domestic demand more than offset a 12.0% increase in export volumes. ’17-’18 YTD disappearance has rebounded by 6.3% throughout the first three quarters of the production season, despite the most recent decline.

Jun ’18 U.S. NFDM/SMP combined production and import figures outpaced total disappearance figures, resulting in stocks increasing for the first time in the past seven months.

Fluid Milk – Total Milk Sales Decline 3.2% YOY on Continued Weak Fat-Free Sales

May ’18 U.S. fluid milk sales declined on a YOY basis for the 11^th time in the past 12 months, finishing down 3.2% to the lowest seasonal figure on record for the month of May. Sales of whole milk increased on a YOY basis for the 12^th time in the past 13 months, finishing up 0.4%, however fat-free milk sales remained weak, declining by 7.9%. ’16-’17 annual U.S. total fluid milk sales declined to a record low for the eighth consecutive year, finished down 1.7%, while ’17-’18 YTD sales have declined an additional 1.8% throughout the first two thirds of the production season. ’17-’18 YTD whole milk sales are on pace to reach an eight year high, however fat-free milk sales are on pace to finish at the lowest figure on record, down over 50% from levels experienced ten years ago.

Fat consumed within U.S. fluid milk declined on a YOY basis for the second time in the past three months during May ’18 as total consumption finished down 1.8%. ’16-’17 annual total fat consumed within U.S. fluid milk increased 0.2% YOY to a four year high however ’17-’18 YTD fat consumption within U.S. fluid milk has declined 0.1% on a YOY basis throughout the first two thirds of the production season.

Domestic commercial disappearance increased most significantly on a YOY basis for cheese while declining most significantly for NFDM/SMP. International commercial disappearance finished most significantly higher for NFDM/SMP while finishing slightly lower on a YOY basis for butter.