U.S. Dairy Cold Storage Update – Jan ’16
Butter – Stocks Remain Significantly Higher on YOY Basis According to USDA, Dec ’15 U.S. butter stocks of 152.9 million pounds remained significantly higher on a YOY basis, finishing up 46.0%. Butter stocks increased by 20.2 million pounds, or 15.2%, from the previous month, which was significantly greater than the ten year average November – December seasonal increase of 3.9 million pounds, or 3.9%. U.S. butter stocks typically reach their seasonal peak in May, followed by seasonal drawdowns until lows are reached during the winter months. The most recent seasonal drawdown in butter stocks of 132.1 million pounds was 11.7% less than the prior three year average seasonal drawdown as weak export demand has outweighed increases in domestic consumption. U.S. butterfat exports have declined YOY for 19 consecutive months through Nov ’15. Cheese – Stocks Remain Significantly Higher YOY, Reach 32 Year High for Month of December Dec ’15 U.S. cheese stocks of 1.15 billion pounds finished down 0.1% MOM but up 12.6% YOY to a new 32 year high for the month of December. The monthly YOY increase in cheese stocks was the 14th experienced in a row. 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. Strong cheese production has been partially offset by continued strong domestic demand, however cheese exports remained lower YOY for the 14th consecutive month in Nov ’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.