U.S. Cold Storage Update – Jul ’14
Butter – YOY Stocks Continue Decline According to USDA, Jun ’14 U.S. butter stocks continue to lag previous years, with Jun ’14 stocks of 186.1 million pounds coming in 41.6% below last year’s levels and 23.3% below the five year average June butter stocks. The Jun ’14 YOY decline in butter stocks was the second largest in over three and a half years on a percentage basis, trailing only the Apr ’14 decline of 43.8%. Butter stocks were down 6.4 million pounds, or 3.3%, vs. May ’14 stocks as they begin to seasonally decline throughout the second half of the year. Butter stocks typically reach their seasonal peaks in May before declining from June to November. The stock build of 80.0 million pounds from Dec ’13 – May ’14 was less than half of the 168.9 million pound build of last year and 45.1 million pounds (36.1%) lower than the five year average Dec – May stock build. Most of the YTD declines in butter stocks can be attributed to an increase in exports, which accounted for 76% of the seasonal drawdown from May ’13 – Dec ’13. U.S. butter exports began to show weakness in May ’14, declining 39.1% MOM and 7.5% YOY as U.S. prices traded at a premium to Europe prices when adjusted to 80% butterfat for the first time since Oct ’12. The May ’14 YOY decline in butter exports was the first decline in 12 months. Domestic butter exports were 128.1% greater than the previous year for the 12 month period leading up to May ’14. Cheese – YOY Stock Declines Continue on Increasing Exports Jun ’14 U.S. cheese stocks of 1.06 billion pounds declined slightly from last month, but continue to remain significantly lower on a YOY basis. Jun ’14 cheese stocks declined 7.6% YOY, matching the average Mar ’14 – May ’14 declines. Mar ’14 – Jun ’14 cheese stock declines were the largest YOY declines in over 12 years. YOY U.S. cheese stock declines have accelerated throughout the past several months as milk production in key cheese producing states declined and U.S. cheese exports increased. Milk production has started to turn around in key Midwestern cheese producing states but cheese exports continue to remain near all-time high levels. May ’14 U.S. cheese exports were 15.5% greater than the previous year and domestic cheese exports were 33.2% greater than the previous year for the 12 month period leading up to May ’14.