U.S. Dairy Cold Storage Update – Feb ’16
Executive Summary U.S. cold storage figures provided by USDA were recently updated with values spanning through Jan ’16. Highlights from the updated report include: • Butter stocks continued to increase seasonally while also remaining higher on a YOY basis, finishing 31.7% above the previous year’s level. • Cheese stocks also remained higher on a YOY basis, finishing up 12.4% to a new 31 year high. Additional Report Details Butter – Stocks Remain Significantly Higher on YOY Basis According to USDA, Jan ’16 U.S. butter stocks of 196.1 million pounds remained significantly higher on a YOY basis, finishing up 31.7%. Butter stocks increased by 41.0 million pounds, or 26.5%, from the previous month, which was less than the ten year average December – January seasonal increase of 46.3 million pounds, or 45.7%. The MOM increase remains impressive, however, when considering it was on top of an eight year seasonal high experienced in December. Jan ’16 butter stocks finished 17.7% above the three year average butter stocks for the month of January. 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 previous three year average seasonal drawdown as weak export demand outweighed increases in domestic consumption. U.S. butterfat exports have declined YOY for 20 consecutive months through Dec ’15. Cheese – Stocks Remain Significantly Higher YOY, Reach a 31 Year High Jan ’16 U.S. cheese stocks of 1.18 billion pounds finished up 2.8% MOM and 12.4% YOY to a new 31 year high. The monthly YOY increase in cheese stocks was the 15th 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 15th consecutive month in Dec ’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.