U.S. Commercial Disappearance Update – Jan ’15
All Milk – YOY Disappearance Remains Slightly Lower on Milk-Fat and Skim-Solids Bases According to USDA, Nov ’14 U.S. commercial disappearance for milk used in all products remained lower YOY on both a milk-fat and skim-solids basis, down 0.7% and 0.5%, respectively. Disappearance on a milk-fat basis has declined by 0.8% YOY in total over the past four months after increasing YOY for 14 consecutive months from Jun ’13 – Jul ’14 at an average rate of 3.3%. Disappearance on a skim-solids basis declined YOY for the second consecutive month after increasing by an average rate of 2.7% from May ’14 – Sep ’14. Domestic demand outpaced international demand in Nov ’14, finishing up 1.5% YOY on a milk-fat basis but down 0.2% YOY on a skim-solids basis. The YOY declines in commercial disappearance to begin the ’14-’15 production season follow strong disappearance experienced last year. ’13-’14 annual commercial disappearance for milk used in all products finished up 3.0% on a milk-fat basis and 2.1% on a skim-solids basis. The ’13-’14 YOY increase in commercial disappearance on a milk-fat basis set a new record annual high while disappearance on a skim-solids basis finished 0.3% ahead of average annual disappearance. The majority of the ’13-’14 annual gains stemmed from an increase in international demand. ’13-’14 annual domestic commercial disappearance for milk used in all products finished up only 1.7% on a milk-fat basis and 1.1% on a skim-solids basis. Butter – YOY Declines in Disappearance Continue, International Demand Remains Weak Nov ’14 U.S. butter commercial disappearance increased seasonally MOM, up 18.7% on a daily average basis, but remained lower on a YOY basis, down 13.2%. Butter disappearance has declined on a YOY basis for five consecutive months, with the Nov ’14 percentage decline being the third largest in the last two years, trailing only the Aug ’14 and Oct ’14 declines. Demand for U.S. butter has moderated due to recent significant price increases, with disappearance down 15.6% YOY from Aug ’14 – Nov ’14. Aug ’14 – Nov ’14 U.S. announced butter prices increased YOY by an average of 68.0%, although butter prices are off the peak prices experienced in Sep ’14. Higher domestic butter prices have led to a drastic decline in exports, with Aug ’14 – Nov ’14 butterfat export volumes down 72.3% YOY. Domestic butter demand was also weaker on a YOY basis in Nov ’14, with domestic commercial disappearance down 7.8%. Lower domestic demand, coupled with the recent declines in butterfat exports, has led to a reduction in U.S. butter stock deficits. U.S. butter stocks continue to lag previous years, however the Dec ’14 deficit in butter stocks was the smallest on a percentage basis in the past 13 months. Cheese – Disappearance Declines Slightly on YOY Basis, Down 0.8% Nov ’14 U.S. cheese commercial disappearance declined 0.8% YOY and 3.4% seasonally MOM on a daily average basis. Nov ’14 U.S. cheese commercial disappearance was the eighth highest monthly figure ever recorded but was slightly below the three year average November disappearance. Nov ’14 U.S. American cheese commercial disappearance led the declines, down 1.8% YOY and 5.1% MOM on a daily average basis while other-than-American cheese commercial disappearance declined 0.2% YOY and 2.3% MOM on a daily average basis. Domestic cheese demand increased slightly YOY for both American and other-than-American cheese, but American and other-than-American cheese declined MOM, down 4.7% and 2.4%, respectively on daily average bases. NFDM/SMP – YOY Commercial Disappearance Rebounds, up 4.5% to New November Record Nov ’14 U.S. NFDM/SMP commercial disappearance increased 4.5% YOY and 3.8% MOM on a daily average basis to the largest November figure on record. U.S. NFDM/SMP domestic commercial disappearance was significantly higher on a YOY basis, increasing 25.6%, but lower MOM on a daily average basis, down 7.5%. International demand was lower on a YOY basis, down 6.7%, but increased MOM on a daily average basis, up 13.8%. Fluid Milk Sales – YOY Sales Continue to Decline Nov ’14 U.S. fluid milk sales continued to decline, falling 5.1% YOY and 1.7% MOM on a daily average basis. The YOY decline was the second largest in over a year on a percentage basis while the October – November decline in sales was the first in five years. Monthly fluid milk sales have declined YOY for 19 consecutive months, with an average YOY decline of 2.8% over the period. YOY declines in fluid milk sales are on top of historically weak demand last production season. ’13-’14 annual fluid milk sales declined 2.9% YOY, which was the largest annual YOY decline on record. See the table below for a summary of key Nov ’14 U.S. dairy commercial disappearance figures in addition to the Nov ’14 fluid milk sales figure.