Butter Stocks Shrink
November 22, 2021
Manufacturers moved butter out of warehouses and into grocery cases, restaurant larders, and consumers’ refrigerators again in October. U.S. butter inventories declined for a fourth straight month, according to USDA’s Cold Storage report released this afternoon. Butter inventories peaked at a 27-year high in June. Since then, stocks have fallen more than 133 million pounds, the strongest July- to-October drawdown since 2013.
There were 281.5 million pounds of butter in cold storage warehouses on October 31, 6.1% less than the prior year. High cream values restrained butter output, and demand was brisk as retailers stocked up for the holiday baking season.
These trends accelerated in November, suggesting stocks have again tightened. The spot butter market has rallied in response. It climbed 18ȼ last month and gained another nickel so far in November. Last week, CME spot butter briefly touched two-year highs, having moved above $2/lb.
In contrast, cheese remained plentiful.
Cheese inventories typically decline in October, and did last month, but the drawdown was modest, totaling just 6.6 million pounds. In most years, cheese stocks wane through late summer and fall. Over the past four months, cheese stocks bucked that trend and grew more than 16 million pounds, the largest July-to-October increase since 2010.
There were 1.45 billion pounds of cheese in storage at the end of last month, 8.2% more than a year ago. Inventories of American-style cheese also defied seasonal rends and rose slightly to 845.6 million pounds, the highest October tally since 1984. American cheese stocks were 11.8% greater than year-ago volumes. U.S. consumers have been hungry for cheese and exports have boomed, but demand has been no match for the increase in U.S. cheese output. Excess inventories have weighed heavily on barrel values. While CME spot Cheddar barrels prices advanced 6.5ȼ in October, they have since fallen 31ȼ to $1.51/lb.