U.S. Dairy Cold Storage Update – Feb ’15
Butter – Stocks Increase on YOY Basis for First Time in 14 Months According to USDA, Jan ’15 U.S. butter stocks of 148.1 million pounds finished up 41.4% MOM and 2.9% YOY. The YOY increase in butter stocks was the first experienced in the past 14 months. The MOM increase in butter stocks of 43.4 million pounds was consistent with the five year average Dec – Jan seasonal build of 44.3 million pounds. Jan ’14 – Dec ’14 butter cold storage figures were also revised higher by 6.3% as a result of updated facility information. The May ’14 – Dec ’14 seasonal drawdown in butter stocks of 104.7 million pounds was less than half of the prior year’s seasonal drawdown due to a significant reduction in export demand. Throughout the period, YOY U.S. butterfat exports declined by 89.1 million pounds, or 55.9%, as domestic butter prices traded at a significant premium to international butter prices. U.S. butterfat exports reached a five month high in Dec ’14 as the U.S. butter price premium was reduced; however export volumes remain far below historical levels heading into 2015. Cheese – Stocks Increase on YOY Basis for Third Consecutive Month Jan ’15 U.S. cheese stocks of 1.04 billion pounds continue to increase on a YOY basis, finishing up 27.5 million pounds, or 2.7%. The monthly YOY increase in cheese stocks was the third in a row after ten consecutive months of YOY declines were experienced from Dec ’13 to Sep ’14. American cheese stocks also increased YOY for the third consecutive month, finishing up 1.7 million pounds, or 0.3% YOY. Declines in YOY U.S. cheese stocks accelerated throughout the spring and summer months of 2014 as milk production in key cheese producing states declined and U.S. cheese exports increased. This trend has continued to reverse course as milk production has stabilized in Midwestern cheese producing states while cheese exports declined YOY from Oct ’14 – Dec ’14 for the first times in 18 months. The Nov ’14 – Dec ’14 YOY declines in cheese exports were the largest in over five years on a percentage basis, although export volumes remain significantly higher than historical figures. 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.