Executive Summary

U.S. cold storage figures provided by USDA were recently updated with values spanning through Jul ’18. Highlights from the updated report include:

• Jul ’18 U.S. butter stocks remained higher on a YOY basis for the fifth consecutive month, finishing 3.5% above the previous year. Butter stocks finished at the second highest seasonal figure experienced throughout the past 25 years for the month of July.
• Jul ’18 U.S. cheese stocks increased 3.3% YOY, finishing at a new monthly record high level. Other-than-American cheese stocks increased 9.6% on a YOY basis throughout the month, more than offsetting a 0.8% YOY decline in American cheese stocks. Total cheese stocks have finished higher on a YOY basis over 45 consecutive months through July.

Additional Report Details

Butter – Stocks Remain Higher YOY for the Fifth Consecutive Month, Finish up 3.5%

According to USDA, Jul ’18 U.S. butter stocks declined seasonally to a three month low but remained 3.5% higher YOY, finishing higher on a YOY basis for the fifth consecutive month. Butter stocks finished at the second highest seasonal figure experienced throughout the past 25 years for the month of July, finishing 6.7% above three year average seasonal figures.

The MOM seasonal decline in butter stocks of 18.6 million pounds, or 5.5%, was larger than the ten year average June – July seasonal decline of 6.9 million pounds, or 2.8%, however. U.S. butter stocks typically begin to decline seasonally throughout the second half of the calendar year, reaching seasonal low levels throughout the months of November and December. The most recent seasonal drawdown in butter stocks of 154.8 million pounds, occurring from May ’17 – Nov ’17, was larger than the ten year average seasonal drawdown of 140.2 million pounds.

On a days of usage basis, Jul ’18 U.S. butter stocks finished lower YOY, however. When assuming 12 month rolling average YOY usage rates and known stock values for the month of July, butter stocks on a days of usage basis declined YOY for the first time in the past five months, finishing down 10.2%.

Cheese – Stocks Increase to a New Monthly Record High Level, Finish up 3.3% YOY

Jul ’18 U.S. cheese stocks increased 1.8% MOM and 3.3% YOY, finishing higher on a YOY basis for the 45^th consecutive month and reaching a new monthly record high level. Other-than-American cheese stocks increased 9.6% on a YOY basis throughout the month, more than offsetting a 0.8% YOY decline in American cheese stocks. Total cheese stocks finished 11.5% above three year average seasonal figures for the month of July.

The MOM seasonal build in cheese stocks of 25.6 million pounds, or 1.8%, was slightly greater than the ten year average June – July seasonal build of 17.0 million pounds, or 1.5%. 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 seasonal build in cheese stocks representing a 13% increase in stocks vs. a 121% 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.

On a days of usage basis, Jul ’18 U.S. cheese stocks finished lower YOY, however. When assuming 12 month rolling average YOY usage rates and known stock values for the month of July, cheese stocks on a days of usage basis declined YOY for the first time in the past four months, finishing down 7.4%.