U.S. Cold Storage Update – Aug ’14
Butter – YOY Stocks Continue Decline According to USDA, Jul ’14 U.S. butter stocks continue to lag previous years, with stocks of 170.2 million pounds coming in 42.4% below last year’s levels and 27.5% below the five year average July butter stocks. The Jul ’14 YOY decline in butter stocks was the second largest in over three and a half years on a percentage basis, trailing only the Apr ’14 decline of 43.8%. Butter stocks were down 15.8 million pounds, or 8.5%, vs. Jun ’14 stocks as they continue to seasonally decline throughout the second half of the year. Butter stocks typically reach their seasonal peaks in May before declining from June to November as holiday demand increases. The Jun ’14 – Jul ’14 decline in butter stocks was over double the five year average June – July monthly decline. Most of the YTD declines in butter stocks can be attributed to an increase in exports, which accounted for 76% of last year’s seasonal drawdown. U.S. butter exports began to show weakness in May ’14, declining 39.1% MOM and 7.5% YOY as U.S. prices traded at a premium to Europe prices when adjusted to 80% butterfat for the first time since Oct ’12. YOY declines in butter exports continued in Jun ’14, with shipments down 21.2% YOY. The May ’14 and Jun ’14 YOY declines in butter exports were the first in over a year. Domestic butter exports were 128.1% greater than the previous year for the 12 month period leading up to May ’14. Cheese – YOY Stock Declines Continue on Increasing Exports Jul ’14 U.S. cheese stocks of 1.06 billion pounds were flat vs. last month, but continue to remain significantly lower on a YOY basis. Jul ’14 cheese stocks declined 7.9% YOY, slightly higher than the average Mar ’14 – Jun ’14 declines. Mar ’14 – Jul ’14 cheese stock YOY declines were the largest in over 12 years. YOY U.S. cheese stock declines have accelerated throughout the past several months as milk production in key cheese producing states declined and U.S. cheese exports increased. Milk production has started to turn around in key Midwestern cheese producing states but cheese exports continue to remain near all-time high levels. Jun ’14 U.S. cheese exports were the second highest monthly figure ever recorded and 32.2% greater than the previous year.