July 31 butter stocks totaled 170.2 million lbs., down 9% from June 30, and 42% less than July 2013, according to USDA’s Cold Storage report, released Aug. 22.
Total natural cheese stocks, at 1.06 billion lbs., were virtually unchanged from June 2014, but down 8% from July 2013. American cheese, at 660.4 million lbs., was up about 1% from June, but 6% less than a year earlier.
Final June stocks of butter and cheese were also reduced from last month's preliminary estimates.
In anticipation of the Cold Storage numbers, the CME spot butter price soared to a new record high on Friday, up 6.25¢ to $2.8225/lb. CME Cheddar blocks (+1.25¢) and barrels (+0.25¢) also rose.
At first glance, HighGround Dairy called the report bullish vs. market expectations.
Dave Kurzawski, FCStone, characterized the report as bullish for butter, but bearish on cheese.
“Today’s Cold Storage report saw butter stocks decrease to 170.2 million lbs., down 9.9% vs. May and down 42.5% vs. last year, Kurzawski noted. ”While a decline in stocks is typical from June into July, it was well beyond our expectations for 181.2 million lbs. We also remain below 2011 levels, and at our lowest inventory level since February. The spot and futures (butter) market direction has been relatively clear for some time, and this report will too little to diffuse the rally. We’d expect prices to open the week mostly higher come Sunday evening.”
Turning to cheese, Kurzawski said stocks came in slightly above expectations. “We would term this report bearish on cheese due to the fact that American cheese came in at 660.4 million lbs., well above our expectation for 649.1 million lbs. Sunday night may see some moderate weakness as a result of the report but participants will be eagerly awaiting the spot session Monday for price direction.”
Cattle on feed down 2%
Cattle and calves on feed for slaughter market in U.S. feedlots with capacity of 1,000 or more head totaled 9.8 million head on Aug. 1, 2% less than a year earlier. July placements totaled 1.56 million head (1.50 million net), down 7% from a year earlier. July fed cattle marketings totaled 1.79 million, down 9% from a year ago and the lowest July total since recording started in 1996.
Source: USDA Cattle on Feed report
Dairy replacement sales results from New Holland, Pa. on Aug. 20. Compared to last week, dairy cows sold mostly $100-$200 higher compared to a light test last week. Demand was good. Bred heifers sold mostly steady on a light test; demand was good and trade was active. Wednesday's supply included 131 fresh milking cows, 10 springing cows, 32 short bred cows, 25 springing heifers, 33 short-bred heifers, 37 open heifers, and 10 bulls. One hundred percent of reported supply Holsteins unless otherwise