Dairy Skim – August 2023 US Cold Storage Report

Dairy Skim is a bite-size episode series where HighGround’s top analysts break down the latest dairy data release. Today, Betty Berning discusses the August 2023 US Cold Storage Report. Customers can view the snapshot report here. Subscribe so that you never miss an episode!

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[00:04] Betty: Hello, everyone, and welcome back to the Dairy Skim, HighGround Dairy’s bite-sized podcast intended to give the dairy industry some flavor into recent reports or events that can impact global commodity pricing. This is Betty Berning, Contributing Dairy Economist at HighGround Dairy. It is a very rainy day here in the Upper Midwest, perfect weather for analyzing Cold Storage data, which the USDA released this afternoon.

[00:31] Butter has gone over $3 per pound, hitting that mark on Friday and in today’s training session went even higher to $3.04 per pound. With Cold Storage inventories at 289 million pounds in August, the higher prices are beginning to make a lot sense. From July to August, stocks fell 40 million pounds and that is pretty sizable. It’s the biggest for the month since 2015. Since May, butter stocks have dropped by 78 million pounds, the second-highest number since 1986. Again, sizable and helping to explain current butter prices. A lot of Class II products were made over the summer and milk production in butter-heavy parts of the country was down significantly, meaning that most likely, less butter was produced against decent domestic demand. Also of note, USDA revised July’s inventories down by nearly 2.3 million pounds.

[01:33] Moving on to cheese, total cheese stocks grew annually by 0.9%, totaling 1.489 billion pounds, setting a record for the month. Stocks followed the normal seasonal pattern of falling from July to August, but were down just 0.2% or 3.5 million pounds. This is much less of a drawdown than the five-year average of nearly 25 million pounds.

[02:01] If I break the category further apart, natural American cheese equaled 849 million pounds sitting in warehouses. That was actually up from July, bucking the normal trend, and was also up from year-ago levels. While the value is not quite an August record, the last time August levels were this high was in 1985 when the government had massive quantities of cheese in stocks. That said, the counter-seasonal growth helps to explain the current weakness in Blocks and Barrels at the CME.

Those are the highlights and today’s report certainly helps to explain the wild markets we’ve seen since the start of last week. Be on the lookout for more information from HighGround and you’ll hear from the HighGround team again on Friday afternoon with our weekly Let’s Chat Markets podcast to recap the key highlights from the week. Talk soon and take care!

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