How does the July US Cold Storage Report affect cheese and butter prices? Learn what these trends mean for your dairy farm‘s bottom line.
Summary: Are you curious about the latest trends in dairy inventories? The July 2024 US Cold Storage Report reveals cheese inventories are at their lowest since 2020, primarily due to manufacturers prioritizing mozzarella and gouda over American cheese. Meanwhile, butter stocks fell by 23 million pounds from June to July, though they’re still up 7.4% from last year. With holiday demand on the horizon, cheese prices are expected to stay above $2 per pound through October, and butter prices could also rise.
- Cheese inventories are the lowest since 2020, mainly due to a shift towards mozzarella and gouda production.
- Butter stocks dropped by 23 million pounds from June to July but are still 7.4% higher than last year.
- Cheese prices are expected to stay above $2 per pound through October due to the upcoming holiday demand.
- Butter prices may rise with increased seasonal demand despite healthy inventory levels.
- Monitoring these inventory trends is essential for adjusting your production and pricing strategies.
The July 2024 US Cold Storage Report, a crucial document for your dairy business, was released late last Friday. It contains vital information that could significantly impact cheese and butter prices. Let’s explore the specifics together to ensure you are well-informed and empowered to make strategic decisions.
| Item | July 2023 Stocks (million lbs) | June 2024 Stocks (million lbs) | July 2024 Stocks (million lbs) | % Change (June to July 2024) | % Change (Year-over-Year) |
|---|---|---|---|---|---|
| Cheese | 1,350 | 1,400 | 1,375 | -1.8% | +1.9% |
| Natural American Cheese | 800 | 850 | 875 | +2.9% | +9.4% |
| Butter | 320 | 345 | 322 | -6.7% | +0.6% |
| Milk | 75 | 80 | 79 | -1.3% | +5.3% |
Cheese Inventory Insights
Cheese stores are depleting, with July stockpiles reaching their lowest since 2020. This pattern has driven a surge in the CME spot market since mid-July. The CME spot market is a crucial indicator of current market prices, and the surge suggests a significant increase in demand for cheese. Manufacturers have focused on mozzarella and gouda, leaving American cheese, particularly cheddar, in low supply.
How does this affect your bottom line? Current market data shows prices will remain over $2 per pound through October.
Butter Stock Analysis
Butter stockpiles declined by 23 million pounds between June and July. While the monthly decline is substantial, total inventories are still 7.4% higher than last year. The USDA’s adjustment of June butter stockpiles included an additional 3.3 million pounds. As Christmas approaches, butter prices are expected to rise as demand climbs.
Considering Long-Term Trends in Dairy Stocks
Is this the first time you’ve seen such low-cheese inventories? If we examine the data, we can detect a definite pattern. In July 2020, cheese inventories were much higher. Prices were roughly $1.90 per pound back then, a far cry from the more than $2 per pound we see now. This historical data from the USDA provides a valuable perspective on the current market conditions and the potential for price increases.
Notably, this year’s adjustment in cheese production priority has accelerated the fall. Manufacturers have concentrated on mozzarella and gouda, with American cheeses like cheddar taking a second seat. This concentration resulted in a sustained decline in American cheese stocks, repeating patterns we’ve witnessed for many years.
Comparing our present condition to last year on the butter front is intriguing. Butter stockpiles fell by around 23 million pounds in July 2023, according to StoneX [https://www.stonex.com]. Despite a considerable monthly decline, inventories are up 7.4% over the prior year. Historical data reveals a volatility trend but shows the continued robustness of the butter market recovery.
So, although current figures provide a decent snapshot, going back allows us to see the bigger picture. Seasonal variations, manufacturing shifts, and changing market needs all influence these stocks and pricing. As the Christmas season approaches, these historical lessons emphasize the potential of persistent high pricing and tight stock conditions.
Market Expectations and Seasonal Trends
Cheese and butter prices are expected to stay high due to low milk output during the seasonal and upcoming holidays. This means you should anticipate higher production costs and adjust your budget accordingly. Understanding these tendencies might help you make more educated judgments about your production and pricing strategies for the next several months.
What Do These Inventory Trends Mean for You?
So, what do these inventory patterns imply for you as a dairy farmer? Let us break it down.
Implications for Production Strategies
With cheese stockpiles, particularly Natural American cheese, at their lowest point since 2020, you should reconsider your milk allocation. Manufacturers have prioritized mozzarella and gouda above cheddar. This tendency shows that concentrating on specific kinds better corresponds with market demand and provides higher pricing. While the 23 million pound decrease from June to July is substantial for butter, the improved inventory levels indicate that production does not need significant adjustments. However, with the Christmas season approaching, increasing butter production may help you meet the expected surge in demand.
Affect on Pricing Decisions
Cheese and butter prices have demonstrated resiliency and are expected to remain stable or grow. Given the limited milk stockpiles and anticipated Christmas season rise, keeping a watch on the CME spot market is critical. Prices for natural American cheese have already risen, which may result in better profits if your production plan is aligned. Seasonal demand surges for butter may drive prices even higher. With present stockpiles robust but manageable, there is an opportunity for price increases. Making sure you’re prepared to handle this demand might boost your profitability. These patterns show the need for strategic planning. Stay current with market research and be adaptable with your production strategy to capitalize on current prospects. Taking an educated approach might help you navigate this volatile market more efficiently.
The Bottom Line
The July 2024 US Cold Storage Report provides a mixed bag of information. While cheese stockpiles are low, allowing for higher prices, butter inventories are generally robust but set for price increases due to seasonal demand. As you plan for the following months, consider these patterns and how they can affect your operations. What tactics will you use to manage market shifts?
Learn more:
- Cheese and Butter Prices Plummet After Holiday Weekend: Market Struggles to Recover
- Dairy Market Analysis: Milk Futures Hold Steady, Spot Cheese Gains, and Butter Slips
- Is the Summer Heat Finally Over? Dairy Farmers See Milk Production Stabilize, but Challenges Remain!
