U.S. Dairy Products Production Update – Nov ’14
Butter – Production Remains Weak, Down 1.6% YOY According to USDA, Sep ’14 U.S. butter production declined 1.6% YOY but increased seasonally, up 4.5% MOM on a daily average basis. Lower production has resulted in a significant decline in butter stocks and a subsequent increase in domestic butter prices. Sep ’14 butter stocks ended 37.3% below the previous year’s level and the Sep ’14 announced butter price of $2.85 was double that of last year. Prices have subsided throughout Oct ’14, but remain at a significant premium to international prices. ’13-’14 YTD butter production finished 2.4% lower than the previous year. Cheese – Production Growth Continues U.S. cheese production increased YOY for the 18th straight month as Sep ’14 production registered a 4.7% YOY gain. The YOY gain of 4.7% was nearly double the 2.4% YTD average YOY gain. Cheddar cheese production was particularly strong, increasing 5.9% YOY in Sep ’14. ’13-’14 YTD total cheese production finished 2.6% higher than the previous year with cheddar cheese production finishing 1.2% higher. Dry Products – Dry Whey Production Declines, Combined SMP/NFDM Production Increases U.S. dry whey production declined 3.9% YOY but increased 3.3% MOM on a daily average basis. The YOY decline in whey production was the 15th in the last 17 months as manufacturers continue to shift to higher-value whey protein products including whey protein concentrates (WPC) and whey protein isolates (WPI). ’13-’14 YTD U.S. dry whey production finished down 9.0%, however YTD WPC and WPI production finished up 20.4% and 6.0%, respectively. Despite stronger MOM production, dry whey stocks declined 2.2% MOM, or 1.3 million lbs, to a total of 57.1 million lbs. Sep ’14 dry whey stocks were down 5.0% YOY, although stocks remain 18.4% higher than the five year average September dry whey stocks. U.S. NFDM production remained higher on a YOY basis, increasing 54.1%, while production remained virtually flat MOM. SMP production declined YOY for the fourth month in a row, falling 24.5% and 21.8% MOM on a daily average basis. SMP, which is more suited to the requirements of most global markets, has experienced YOY production declines as powder exports have begun to experience relative weakness. Combined production of NFDM and SMP increased 20.9% YOY, the seventh consecutive monthly increase in production. ’13-’14 YTD U.S. NFDM and SMP production finished higher by 5.8% and 1.9%, respectively, with combined production finishing 4.8% higher. NFDM stocks declined significantly MOM as stocks continue to decline seasonally from the all-time high set in Jul ’14. NFDM stocks declined by 71.7 million lbs, or 29.5%, but remain 17.9% higher than last year and 26.7% higher than the five year average September NFDM stocks. See the table below for a summary of key U.S. dairy product production in Sep ’14.