U.S. Dairy Products Production Update – Aug ’14
Note: USDA updated the Aug ’14 dairy products production report to reflect reporting errors in American type cheese and cheddar cheese production figures. Total U.S. cheese production was previously reported as up 0.5% YOY, with cheddar cheese production down 1.3% YOY. Revised figures reflect a 3.3% YOY increase in total cheese production and a 5.5% YOY increase in cheddar cheese production. Butter – Production Declines Slightly YOY, Tight Stocks Continue According to USDA, Jun ’14 U.S. butter production decreased 0.2% YOY, the seventh YOY production decline in eight months. ’13-’14 YTD butter production remains 2.9% lower than the previous year through the first three quarters of the production season. Lower production has resulted in a significant decline in butter stocks and a subsequent increase in domestic butter prices. Jun ’14 butter stocks ended 41.6% below the previous year’s level and the Jul ’14 announced butter price of $2.35 was 60.0% above July of last year. Cheese – Production Growth Continues, Cheddar Production up 5.5% YOY U.S. cheese production increased YOY for the 15th straight month, as Jun ’14 production registered a 3.3% YOY gain. Cheddar cheese was particularly strong, increasing 5.5% YOY. The YOY gain in cheddar cheese production was the largest in ten months and the third YOY increase in a row after four months of YOY declines. Increases in cheese production were particularly impressive as domestic cheese production generally declines seasonally from May – June, with an average seasonal decline of 1.9% throughout the past five years. ’13-’14 YTD total cheese production is 2.0% higher than the previous year through the first three quarters of the production season. Dry Products – Dry Whey Production Down Slightly, Combined SMP/NFDM Production Increases U.S. dry whey production declined 0.9% YOY and 0.6% MOM on a daily average basis but remains elevated when compared to previous YOY declines experienced earlier in the ’13-’14 production season. Despite the recent strength, ’13-’14 YTD U.S. dry whey production remains down 9.7%. U.S. dry whey production declined 9.2% from May ’13 – Apr ’14 as U.S. manufacturers shifted toward higher-value whey protein products including whey protein concentrates (WPC) and whey protein isolates (WPI). WPC remained up 5.4% YOY but WPI was down 3.3% YOY in Jun ’14. Total Jun ’14 dry whey, WPC, and WPI production increased 1.2% YOY. The decrease in dry whey production contributed to a 5.0% MOM decrease in dry whey stocks, with stocks decreasing 3.2 million lbs to a total of 60.7 million lbs. Jun ’14 dry whey stocks were down 12.0% YOY, although stocks were 12.0% higher than the five year average June dry whey stocks. Jun ’14 U.S. NFDM production increased 13.1% YOY while SMP production declined 11.1% YOY. SMP, which is more suited to the requirements of most global markets, declined YOY for only the third time in 23 months as U.S. powder prices continue to gain vs. international prices. Combined production of NFDM and SMP increased YOY for the fourth straight month, with production 5.6% higher than the previous year. NFDM stocks have declined off of all-time highs experienced in Apr ’14 but rebounded MOM, increasing 3.8%. Jun ’14 NFDM stocks of 229.4 million lbs were down slightly YOY but remain at elevated levels vs. past years, ending 22.2% over the five year average June NFDM stocks. See the table below for a summary of key U.S. dairy product production in Jun ’14.