U.S. Commercial Disappearance Update – Oct ’14
All Milk – Commercial Disappearance Declines YOY on Milk-Fat Basis for First Time in 15 Months According to USDA, Aug ’14 U.S. commercial disappearance for milk used in all products continued to increase on a skim-solids basis, up 0.7% YOY, but declined 2.0% YOY on a milk-fat basis. The YOY decline on a milk-fat basis was the first in 15 months while disappearance on a skim-solids basis increased YOY for the 12th time in the past 14 months. ’13-’14 YTD commercial disappearance for milk used in all products remains up 3.1% on a milk-fat basis and 1.8% on a skim-solids basis heading into the final month of the production season. The YOY increase in commercial disappearance on a milk-fat basis remains on pace to be the largest annual increase on record. The majority of the YTD increases have stemmed from an increase in international demand. ’13-’14 YTD domestic commercial disappearance for milk used in all products is up only 1.4% on a milk-fat basis and 0.2% on a skim-solids basis. Butter – Disappearance Remains Low, Down 16.9% YOY Aug ’14 U.S. butter commercial disappearance declined 10.2% MOM and 16.9% YOY. The YOY decline was the largest in over two years on a percentage basis. Demand for U.S. butter has moderated due to recent significant price increases. The Sep ’14 announced butter price was double the price of last September and up 13.2% MOM. Higher domestic butter prices have led to a decline in exports, with Q2 ’14 butter export sales 36.2% below Q1 ’14 sales on a daily average basis. U.S. butter exports have continued to decline through Q3 ’14, with July and August butter exports down 38.5% and 59.8% YOY, respectively. Domestic butter commercial disappearance also weakened in Aug ’14, down 9.6% MOM and 13.4% YOY. ’13-’14 YTD total butter commercial disappearance remains up 5.8% YOY, putting additional pressure on historically tight butter stocks. U.S. butter stocks remain extremely low, with average monthly butter stocks down 40.5% YOY over the past six months. Cheese – YOY Disappearance Declines for First Time in 15 Months but Remains High, Historically Aug ’14 U.S. cheese commercial disappearance declined 0.5% MOM and 2.2% YOY. The YOY decline was the first in 15 months and the largest in over three years on a percentage basis. Cheddar cheese disappearance was particularly weak on a YOY, declining 6.8% in Aug ’14. Despite the YOY decline, cheese disappearance remains high on a historical basis, with Aug ’14 disappearance up 5.3% vs. the five year average September disappearance. U.S. cheese exports increased YOY for the 15th straight months in Aug ’14 but the YOY percentage increase in cheese exports was the lowest in 14 months. Domestic cheese commercial disappearance is also seeing signs of weakness, with Aug ’14 disappearance down 0.3% MOM and 3.1% YOY. ’13-’14 YTD cheese commercial disappearance is up 3.1% YOY, putting additional pressure on tight cheese stocks. Growth in commercial use of other-than-American type cheese (up 4.1% YTD) has continued to be stronger than for American cheese types (up 1.5% YTD). U.S. cheese stocks remain extremely low, with the Mar-Jul ’14 YOY declines in stocks being the largest in over 12 years. As milk production has begun to stabilize in the Midwest, stock deficits have lessened, but still remain well below last year. NFDM/SMP – YOY Commercial Disappearance Rebounds From Last Month’s Low Aug ’14 U.S. NFDM/SMP commercial disappearance rebounded from last month’s relative low, increasing 4.3% MOM and 4.2% YOY. NFDM/SMP disappearance increased despite significantly reduced NFDM/SMP exports, which declined 13.0% MOM and 10.1% YOY in Aug ’14. Increases in domestic NFDM/SMP commercial disappearance outweighed the declines in export demand, with domestic disappearance increasing 38.4% MOM and 30.6% YOY. ’13-’14 YTD NFDM/SMP commercial disappearance is up 2.7% YOY through the first eleven months of the production season. Fluid Milk Sales – YOY Sales Continue to Decline Through June U.S. fluid milk sales continue to decline, with Jun ’14 sales down 2.1% YOY and 7.0% MOM on a daily average basis. Higher milk prices have accelerated the decline in demand for fluid milk over the past several months. Monthly fluid milk sales have declined YOY for 14 straight months, with an average YOY decline of 2.5% over the period. ’13-’14 YTD fluid milk sales are down 2.6% through the first nine months of the production season, on pace to be the largest YOY decline in fluid milk sales on record. See the table below for a summary of key Aug ’14 U.S. dairy commercial disappearance figures in addition to the Jun ’14 fluid milk sales figure.