U.S. Commercial Disappearance Update – Sep ’14
All Milk – Commercial Disappearance up YOY for 14th Straight Month on Milk-Fat Basis According to USDA, Jul ’14 U.S. commercial disappearance for milk used in all products was up 3.1% YOY on a milk-fat basis and 1.3% YOY on a skim-solids basis. June represented the 14th straight month of YOY increases in commercial disappearance for milk used in all products on a milk-fat basis, with commercial disappearance on a skim-solids basis increasing YOY for the 11th month over the same time period. ’13-’14 YTD commercial disappearance for milk used in all products is up 3.6% on a milk-fat basis and 1.9% on a skim-solids basis through the first ten months of the production season. The YOY increase in commercial disappearance on a milk-fat basis is on pace to be the largest annual increase on record. The majority of the YTD increases have stemmed from an increase in international demand. ’13-’14 YTD domestic commercial disappearance for milk used in all products is up only 1.5% on a milk-fat basis and is down 0.1% on a skim-solids basis. Butter – Relative Disappearance Remains Low on Declining Exports Jul ’14 U.S. butter commercial disappearance declined 1.9% YOY but increased 0.4% MOM on a daily average basis. Relative butter disappearance remains low, with May-Jul ’14 combined disappearance being the lowest three month figure in over a year. Demand for U.S. butter appears to have moderated due to recent significant price increases. The Jul ’14 announced butter price was up 52.2% YOY and 7.3% MOM, with additional gains experienced throughout August and September. Higher domestic butter prices have led to a decline in exports, with Q2 ’14 butter export sales 36.2% below Q1 ’14 sales on a daily average basis. Jul ’14 U.S. butter exports were down 38.5% YOY, the largest monthly YOY decline in nearly two years. Strong domestic butter commercial disappearance has helped to mitigate declines in international demand, with Jul ’14 domestic disappearance up 4.7% YOY and 2.2% MOM on a daily average basis. ’13-’14 YTD total butter commercial disappearance remains up 8.2% YOY, putting additional pressure on historically tight butter stocks. U.S. butter stocks remain extremely low, with average monthly butter stocks down 39.2% YOY over the past six months. Cheese – YOY Commercial Disappearance Increases Continue Jul ’14 U.S. cheese commercial disappearance increased 6.7% YOY but declined 2.2% MOM on a daily average basis from the relative high experienced in Jun ’14. Jun ’14 disappearance was the second largest figure on record on a daily average basis, trailing only Oct ’13 disappearance. Despite relatively high prices, U.S. cheese exports have remained strong, having increased by an average of 37.5% YOY over the past 12 months. Domestic cheese commercial disappearance also remains strong, increasing 5.9% YOY in Jul ’14. ’13-’14 YTD cheese commercial disappearance is up 3.6% YOY, putting additional pressure on tight cheese stocks. U.S. cheese stocks remain extremely low, with the Mar-Jul ’14 YOY declines in stocks being the largest in over 12 years. Growth in commercial use of other-than-American type cheese (up 4.4% YTD) has been stronger than for American cheese types (up 2.4% YTD), with other-than-American cheese disappearance particularly strong in Jul ’14, increasing 7.2% YOY. NFDM/SMP – Commercial Disappearance Declines Significantly YOY and MOM Jul ’14 U.S. NFDM/SMP commercial disappearance declined 10.9% YOY and 12.8% MOM on a daily average basis as volumes continue to decline from the recent high experienced in May ’14. Jul ’14 export volumes of NFDM/SMP declined by 16.8% MOM, the largest monthly percentage decline in over three and a half years, resulting in the poor MOM decline in commercial disappearance. Domestic NFDM/SMP commercial disappearance was particularly weak on a YOY basis, declining 27.9%, while also declining 3.6% MOM on a daily average basis.’13-’14 YTD NFDM/SMP commercial disappearance remains up 2.6% YOY through the first ten months of the production season. Fluid Milk Sales – YOY Sales Continue to Decline Through May U.S. fluid milk sales continue to decline, with May ’14 sales down 3.5% YOY and 2.0% MOM on a daily average basis. Higher milk prices have accelerated the decline in demand for fluid milk over the past several months. Monthly fluid milk sales have declined YOY for 13 straight months, with an average YOY decline of 2.3% over the period. ’13-’14 YTD fluid milk sales are down 2.7% through the first eight months of the production season, on pace to be the largest YOY decline in fluid milk sales on record. See the table below for a summary of key Jul ’14 U.S. dairy commercial disappearance figures in addition to the May ‘14 fluid milk sales figure.