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Cheese and Butter Stocks Decline

Cheese and butter stocks typically wane in August, and this year was no exception. As of Aug. 31, 1.48 billion pounds of cheese were in refrigerated warehouses, according to USDA’s Cold Storage report published this afternoon. That was 38 million pounds less cheese in storage than at the end of July, marking the largest July-to-August drawdown since 2018. Assuming U.S. cheese production remained robust, August’s steep decline implies that domestic sales

accelerated last month, while cheese exports moved offshore at a rapid clip. Still, cheese stocks were record high for August, up 3.6% from August 2021. Inventories of American- style cheese were ample but much less burdensome than in the preceding three months. In July, American cheese stocks surpassed prior-year volumes by 5.2%. In August, they were just 1.8% higher than the year before. Tighter stocks likely contributed to the sharp rebound in spot Cheddar values. Over the past eight weeks, CME spot Cheddar blocks rallied 12ȼ, and barrels jumped more than 30ȼ to $2.19/lb., the highest price in nearly three months. Butter inventories remain at multi-year lows. At the end of August, 282.6 million pounds of butter were in inventory, 22.1% less than the prior year and the lowest August tally since 2017.

Butter stocks declined 32.5 million pounds from July to August, a larger than typical summer setback. The reasons for the drawdown were opposite to those of cheese. Sky-high prices likely throttled demand, but production lagged, too. Butter churns sat idle in the summer as other manufacturers lapped up most of the available cream.

September 22, 2022

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