U.S. Dairy Commercial Disappearance Update – Feb ’17
Executive Summary
U.S. dairy commercial disappearance figures provided by USDA were recently updated with values spanning through Dec ’16. Highlights from the updated report include:
Butter – Disappearance Declines Seasonally on Weak Domestic Demand, Finishes Slightly Lower YOY
Dec ’16 U.S. butter commercial disappearance declined 29.8% MOM on a daily average basis from the monthly record high experienced throughout the previous month while also finishing slightly lower on a YOY basis, declining 0.1% to a four year seasonal low. The YOY decline in butter commercial disappearance was the first experienced throughout the past four months. Dec ’16 domestic butter demand declined 1.7% YOY to a four year low for the month of December however international demand increased 112.2% from the nine year seasonal low experienced during the previous year. ’15-’16 annual U.S. butter disappearance increased 2.2% YOY as a 3.3% increase in domestic demand more than offset a 43.7% decline in export volumes. ’16-’17 YTD U.S. butter disappearance remains up an additional 7.1% throughout the first quarter of the production season, despite the recently experienced weakness.
Dec ’16 U.S. butter production and import volumes outpaced total disappearance figures, resulting in the first increase in stocks experienced throughout the past five months. Butter stocks typically decline seasonally until lows are reached throughout the month of November.
Cheese – Disappearance Declines on a YOY Basis for the First Time in 18 Months, Finishes Down 0.9%
Dec ’16 U.S. cheese commercial disappearance declined 5.7% MOM on a daily average basis from the monthly record high experienced throughout the previous month while also finishing 0.9% lower on a YOY basis. The YOY decline in total cheese disappearance was the first experienced throughout the past 18 months, however total cheese disappearance remained at the second highest December figure on record. American cheese disappearance increased 0.4% YOY however other-than-American cheese disappearance declined 1.7% on a YOY basis throughout the month. Domestic cheese demand declined on a YOY basis for the first time in 28 months, finishing down 1.8%, while export demand increased 15.8% throughout the month, finishing higher on a YOY basis for the third consecutive month. Domestic cheese disappearance increased 3.7% throughout the ’15-’16 production season, more than offsetting a 14.0% decline in export demand. ’16-’17 YTD cheese disappearance remains up an additional 2.0% throughout the first quarter of the production season, despite the recently experienced weakness.
Dec ’16 U.S. cheese production and import figures outpaced total disappearance figures, resulting in the first increase in stocks experienced throughout the past five months. Cheese stocks typically reach seasonal lows during the month of November prior to building throughout subsequent months.
Dry Whey – Disappearance Remains Lower on a YOY Basis, Finishes Down 9.9%
Dec ’16 U.S. dry whey commercial disappearancedeclined 1.3% MOM on a daily average basis while also remaining lower on a YOY basis for the fourth consecutive month, finishing down 9.9%. Domestic dry whey demand declined 39.7% throughout the month, more than offsetting a 47.9% increase in export volumes. Domestic dry whey demand has declined on a YOY basis over five consecutive months through December, finishing 32.4% lower over the period. ’15-’16 annual U.S. dry whey disappearance finished up 7.3% YOY as domestic demand increased to an eight year high. ’16-’17 YTD dry whey disappearance has declined 12.4% throughout the first quarter of the production season, however.
Dec ’16 U.S. dry whey production and import volumes outpaced total disappearance figures, resulting in the second increase in stocks experienced throughout the past three months.
WPC – Disappearance Finishes Higher on a YOY Basis as Export Demand Remains Strong
Dec ’16 U.S. whey protein concentrate (WPC) commercial disappearance continued to rebound from the three and a half year low experienced during Oct ’16, increasing 14.0% MOM on a daily average basis and finishing 2.3% higher YOY. WPC export volumes increased on a YOY basis for the 16th time in the past 17 months, finishing up 41.9% and more than offsetting a 24.5% decline in domestic demand. ’15-’16 annual U.S. WPC disappearance increased 0.8% YOY as export demand finished at a record annual high, however domestic demand declined by 20.0% over the period. ’16-’17 YTD WPC disappearance remains down 16.7% throughout the first quarter of the production season as weakness in domestic demand has continued.
Dec ’16 U.S. WPC total disappearance outpaced production and import volumes, resulting in the first decline in stocks experienced throughout the past three months.
NFDM/SMP – Disappearance Declines to an Eight Year Seasonal Low, Finishes Down 26.9%
Dec ’16 U.S. nonfat dry milk (NFDM) and skim milk powder (SMP) commercial disappearance declined 28.5% MOM on a daily average basis and 26.9% YOY, finishing at an eight year seasonal low. U.S. NFDM/SMP domestic disappearance declined 59.6% on a YOY basis to a new 14 year low, while export volumes increased YOY for the sixth consecutive month, finishing up 1.3%. Monthly NFDM/SMP disappearance figures are highly volatile, exhibiting over double the YOY volatility found in butter, cheese and dry whey disappearance figures. ’15-’16 annual U.S. NFDM/SMP disappearance declined 0.7% YOY as a 3.8% decline in domestic demand more than offset a 2.2% increase in export volumes. ’16-’17 YTD NFDM/SMP disappearance has declined an additional 6.1% throughout the first quarter of the production season.
Dec ’16 U.S. NFDM/SMP production and import volumes outpaced total disappearance figures, resulting in stocks rebounding from the 11 month low experienced throughout the previous month.
Fluid Milk Sales – Total Milk Sales Decline 0.3% YOY on Continued Weak Skim Milk Demand
Dec ’16 U.S. fluid milk sales of 4.31 billion pounds declined 0.2% MOM on a daily average basis and 0.3% YOY. Sales of whole milk increased on a YOY basis for the 25th consecutive month, finishing up 5.6%, however fat-free milk sales declined 10.3% YOY throughout the month. ’15-’16 annual U.S. total fluid milk sales declined to a record low for the seventh consecutive year, finished down 0.8% YOY. Annual whole milk sales finished up 5.0% however annual fat-free milk sales declined 11.3% throughout the year. ’16-’17 YTD total fluid milk sales are down an additional 1.2% throughout the first quarter of the production season.
Fat consumed within U.S. fluid milk increased on a YOY basis for the tenth time in the past 11 months during Dec ’16, finishing up 2.2%. ’15-’16 annual total fat consumed within U.S. fluid milk increased 1.6% YOY and ’16-’17 YTD figures are up an additional 1.0% throughout the first quarter of the production season.
Overall, Dec ’16 domestic commercial disappearance declined most significantly on a YOY basis for NFDM/SMP, dry whey and WPC, while international disappearance finished most significantly higher for butter, dry whey and WPC throughout the month.
When average seasonal and trend factors are removed from disappearance figures, dairy stocks-to-use ratios have been moderately correlated with milk prices, historically. Because milk used within all dairy products on a milk-fat basis best mirrors the domestic market, correlations between stocks-to-use ratios and prices are most meaningful on a milk-fat basis and less conclusive on a skim-solids basis due in part to additional international exposure. As a result, stocks-to-use ratios are somewhat useful for projecting Class III prices, but less useful when attempting to determine Class IV price direction. The correlation between annual normalized stocks-to-use ratios on a milk-fat basis and Class III prices is shown below, updated with Dec ’16 commercial disappearance figures. Click here for a full dairy insights report that analyzes dairy stocks-to-use ratios and their correlations to milk prices.
- Dec ’16 U.S. commercial disappearance for milk used in all products remained at or near record high seasonal levels for the month of December on both a milk-fat and skim-solids basis, despite weak domestic demand experienced throughout the month.
- Dec ’16 commercial disappearance of butter and cheese declined from the monthly record high levels experienced throughout the month, finishing lower on a YOY basis for the first times in four and 18 months, respectively. Dry whey disappearance remained lower on a YOY basis during Dec ’16 while nonfat dry milk disappearance declined sharply, reaching an eight year seasonal low.
- U.S. fluid milk sales remained lower on a YOY basis during Dec ’16, finishing down 0.3%. Sales of whole milk increased on a YOY basis for the 25th consecutive month during Dec ’16, however skim milk sales remained weak, declining by 10.3%.
Butter – Disappearance Declines Seasonally on Weak Domestic Demand, Finishes Slightly Lower YOY
Dec ’16 U.S. butter commercial disappearance declined 29.8% MOM on a daily average basis from the monthly record high experienced throughout the previous month while also finishing slightly lower on a YOY basis, declining 0.1% to a four year seasonal low. The YOY decline in butter commercial disappearance was the first experienced throughout the past four months. Dec ’16 domestic butter demand declined 1.7% YOY to a four year low for the month of December however international demand increased 112.2% from the nine year seasonal low experienced during the previous year. ’15-’16 annual U.S. butter disappearance increased 2.2% YOY as a 3.3% increase in domestic demand more than offset a 43.7% decline in export volumes. ’16-’17 YTD U.S. butter disappearance remains up an additional 7.1% throughout the first quarter of the production season, despite the recently experienced weakness.
Dec ’16 U.S. butter production and import volumes outpaced total disappearance figures, resulting in the first increase in stocks experienced throughout the past five months. Butter stocks typically decline seasonally until lows are reached throughout the month of November.
Cheese – Disappearance Declines on a YOY Basis for the First Time in 18 Months, Finishes Down 0.9%
Dec ’16 U.S. cheese commercial disappearance declined 5.7% MOM on a daily average basis from the monthly record high experienced throughout the previous month while also finishing 0.9% lower on a YOY basis. The YOY decline in total cheese disappearance was the first experienced throughout the past 18 months, however total cheese disappearance remained at the second highest December figure on record. American cheese disappearance increased 0.4% YOY however other-than-American cheese disappearance declined 1.7% on a YOY basis throughout the month. Domestic cheese demand declined on a YOY basis for the first time in 28 months, finishing down 1.8%, while export demand increased 15.8% throughout the month, finishing higher on a YOY basis for the third consecutive month. Domestic cheese disappearance increased 3.7% throughout the ’15-’16 production season, more than offsetting a 14.0% decline in export demand. ’16-’17 YTD cheese disappearance remains up an additional 2.0% throughout the first quarter of the production season, despite the recently experienced weakness.
Dec ’16 U.S. cheese production and import figures outpaced total disappearance figures, resulting in the first increase in stocks experienced throughout the past five months. Cheese stocks typically reach seasonal lows during the month of November prior to building throughout subsequent months.
Dry Whey – Disappearance Remains Lower on a YOY Basis, Finishes Down 9.9%
Dec ’16 U.S. dry whey commercial disappearancedeclined 1.3% MOM on a daily average basis while also remaining lower on a YOY basis for the fourth consecutive month, finishing down 9.9%. Domestic dry whey demand declined 39.7% throughout the month, more than offsetting a 47.9% increase in export volumes. Domestic dry whey demand has declined on a YOY basis over five consecutive months through December, finishing 32.4% lower over the period. ’15-’16 annual U.S. dry whey disappearance finished up 7.3% YOY as domestic demand increased to an eight year high. ’16-’17 YTD dry whey disappearance has declined 12.4% throughout the first quarter of the production season, however.
Dec ’16 U.S. dry whey production and import volumes outpaced total disappearance figures, resulting in the second increase in stocks experienced throughout the past three months.
WPC – Disappearance Finishes Higher on a YOY Basis as Export Demand Remains Strong
Dec ’16 U.S. whey protein concentrate (WPC) commercial disappearance continued to rebound from the three and a half year low experienced during Oct ’16, increasing 14.0% MOM on a daily average basis and finishing 2.3% higher YOY. WPC export volumes increased on a YOY basis for the 16th time in the past 17 months, finishing up 41.9% and more than offsetting a 24.5% decline in domestic demand. ’15-’16 annual U.S. WPC disappearance increased 0.8% YOY as export demand finished at a record annual high, however domestic demand declined by 20.0% over the period. ’16-’17 YTD WPC disappearance remains down 16.7% throughout the first quarter of the production season as weakness in domestic demand has continued.
Dec ’16 U.S. WPC total disappearance outpaced production and import volumes, resulting in the first decline in stocks experienced throughout the past three months.
NFDM/SMP – Disappearance Declines to an Eight Year Seasonal Low, Finishes Down 26.9%
Dec ’16 U.S. nonfat dry milk (NFDM) and skim milk powder (SMP) commercial disappearance declined 28.5% MOM on a daily average basis and 26.9% YOY, finishing at an eight year seasonal low. U.S. NFDM/SMP domestic disappearance declined 59.6% on a YOY basis to a new 14 year low, while export volumes increased YOY for the sixth consecutive month, finishing up 1.3%. Monthly NFDM/SMP disappearance figures are highly volatile, exhibiting over double the YOY volatility found in butter, cheese and dry whey disappearance figures. ’15-’16 annual U.S. NFDM/SMP disappearance declined 0.7% YOY as a 3.8% decline in domestic demand more than offset a 2.2% increase in export volumes. ’16-’17 YTD NFDM/SMP disappearance has declined an additional 6.1% throughout the first quarter of the production season.
Dec ’16 U.S. NFDM/SMP production and import volumes outpaced total disappearance figures, resulting in stocks rebounding from the 11 month low experienced throughout the previous month.
Fluid Milk Sales – Total Milk Sales Decline 0.3% YOY on Continued Weak Skim Milk Demand
Dec ’16 U.S. fluid milk sales of 4.31 billion pounds declined 0.2% MOM on a daily average basis and 0.3% YOY. Sales of whole milk increased on a YOY basis for the 25th consecutive month, finishing up 5.6%, however fat-free milk sales declined 10.3% YOY throughout the month. ’15-’16 annual U.S. total fluid milk sales declined to a record low for the seventh consecutive year, finished down 0.8% YOY. Annual whole milk sales finished up 5.0% however annual fat-free milk sales declined 11.3% throughout the year. ’16-’17 YTD total fluid milk sales are down an additional 1.2% throughout the first quarter of the production season.
Fat consumed within U.S. fluid milk increased on a YOY basis for the tenth time in the past 11 months during Dec ’16, finishing up 2.2%. ’15-’16 annual total fat consumed within U.S. fluid milk increased 1.6% YOY and ’16-’17 YTD figures are up an additional 1.0% throughout the first quarter of the production season.
Overall, Dec ’16 domestic commercial disappearance declined most significantly on a YOY basis for NFDM/SMP, dry whey and WPC, while international disappearance finished most significantly higher for butter, dry whey and WPC throughout the month.
When average seasonal and trend factors are removed from disappearance figures, dairy stocks-to-use ratios have been moderately correlated with milk prices, historically. Because milk used within all dairy products on a milk-fat basis best mirrors the domestic market, correlations between stocks-to-use ratios and prices are most meaningful on a milk-fat basis and less conclusive on a skim-solids basis due in part to additional international exposure. As a result, stocks-to-use ratios are somewhat useful for projecting Class III prices, but less useful when attempting to determine Class IV price direction. The correlation between annual normalized stocks-to-use ratios on a milk-fat basis and Class III prices is shown below, updated with Dec ’16 commercial disappearance figures. Click here for a full dairy insights report that analyzes dairy stocks-to-use ratios and their correlations to milk prices.