U.S. Dairy Cold Storage Update – Apr ’15
Butter – Stocks Continue to Build Seasonally, Remain Lower Than Historical Figures According to USDA, Mar ’15 U.S. butter stocks of 184.3 million pounds finished up 3.9% MOM but down 3.9% YOY. Butter stocks have trended fairly consistent with the prior year over the past several months but remain significantly below historical figures. Mar ’15 butter stocks remain 15.6% below the three year average March butter stocks while the MOM increase of 6.9 million pounds was less than the ten year average Feb – Mar seasonal build of 11.6 million pounds. The May ’14 – Dec ’14 seasonal drawdown in butter stocks of 104.7 million pounds was less than half of the prior year’s seasonal drawdown due to a significant reduction in export demand. Throughout the period, YOY U.S. butterfat exports declined by 89.1 million pounds, or 55.9%, as domestic butter prices traded at a significant premium to international butter prices. Despite U.S. butter prices converging downward towards international prices, domestic butterfat exports remained weak in Feb ’15, down 71.7% YOY. Cheese – Stocks Higher on YOY Basis for Fifth Consecutive Month, Finish Flat MOM Mar ’15 U.S. cheese stocks of 1.06 billion pounds were flat from last month but up 4.4% YOY. The monthly YOY increase in cheese stocks was the fifth in a row after 11 consecutive months of YOY declines were experienced from Dec ’13 to Oct ’14. Cheese stocks have remained higher YOY in recent months as milk production has strengthened in Midwestern cheese producing states while weakness in cheese export markets has continued. Total cheese stocks remained higher YOY despite a 1.5% YOY decline in American cheese stocks. American cheese stocks had increased YOY for four consecutive months prior to the Mar ’15 YOY decline. Although cheese stocks remained higher YOY, stocks failed to build from Feb – Mar for the first time in four years. Cheese stocks have increased seasonally from Feb – Mar by an average of 18.9 million pounds, or 2.2%, over the past ten years. Cheese production has remained strong but the additional supply has been partially offset by continued strong domestic demand. Cheese exports remain lower YOY but increased sharply MOM in Feb ’15. 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 Nov – Jul seasonal build in cheese stocks representing a 12.7% increase in stocks vs. a 121.1% 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.