As is usual, butter stocks were reduced during June; however, at twice the normal rate. Butter inventories were trimmed by 10 million pounds compared to a more typical 5m pounds during June.
This left June 30 stocks at 255m pounds, about 25m pounds greater than the five-year average which is slightly skewed by an adjustment in USDA’s data gathering.
With production significantly lower in California, the June drawdown is bullish.
Cheese inventories, after being revised higher for May, grew at 4 times and 5 times the average in June.
American cheese stocks, on the other hand, increased by 15m pounds compared to the five-year average of just 2.7m pounds. The May 31 estimate was revised 5m pounds higher. Stocks finished June at about 685m pounds. This is 30m pounds greater than the five-year average increase.
Other (than American) cheese is a similar story with stocks up 14m pounds during June. This May 31 number was also restated at about 3m pounds less than the original estimate. Typically, stocks increase less than 3m pounds. End-of-June stocks totalled 456m pounds. This is about 33m pounds greater than the five year average.
Aging programmes contributed to some of cheese inventory growth, but a lack of exports was probably a much bigger factor.
The cheese story is bearish and, more so, if you think about the larger-than-one-year-ago pipeline stocks that aren’t captured in the USDA survey.
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Jerry Dryer is chief market analyst at Rice Dairy, Chicago, USA
www.dairymarketanalyst.com
