Cheese and Butter Inventories Drop More Than Expected Amid Market Volatility
Source: DairyNews.today
The CME cheese markets experienced a significant downturn as traders reacted to the USDA’s July Cold Storage report, which revealed a sharper-than-anticipated decline in cheese and butter inventories.
Barrels saw a dramatic price drop of $0.1225, settling at $2.1000 per pound, marking the largest single-day decline since November 2020. Block cheese prices also decreased, albeit at a slower rate, closing at $2.0375 per pound, down by four cents. The trading volume was notably low, with only two lots of blocks and no loads of barrels exchanging hands.
Butter prices continued their downward trend with substantial trading activity. Spot butter closed at $3.1300 per pound, a two-cent decrease, with 22 loads traded, indicating ongoing market softness.
Despite the sharp decline in CME cheese markets, the Class III futures presented a more mixed outlook. The September contract fell by 19 cents to $21.79 per hundredweight, while Q4 futures showed modest gains, settling at $21.33 per hundredweight, up by a dime.
The USDA’s Cold Storage report, which leaned bullish, highlighted a faster-than-average reduction in both cheese and butter inventories for July. Total cheese stocks fell to 1.407 billion pounds, a 5.8% year-over-year decline (down 85.9 million pounds) and a 0.7% month-over-month drop (down 10.2 million pounds). This decline outpaced the five-year average monthly decrease of 6.4 million pounds, indicating a tighter cheese supply.
Butter inventories also reflected a notable shift, with total stocks at 353.8 million pounds. While this represents a 7.4% increase compared to 2023 (up 24.5 million pounds), the month-over-month decline of 6.1% (down 23.0 million pounds) was significantly steeper than the five-year average decline of 8.4 million pounds, underscoring a rapid reduction in available butter supplies.
The unexpected drops in cheese and butter inventories are likely to influence market dynamics in the coming months, as producers and traders adjust to tighter supplies and potential price volatility.
Butter prices continued their downward trend with substantial trading activity. Spot butter closed at $3.1300 per pound, a two-cent decrease, with 22 loads traded, indicating ongoing market softness.
Despite the sharp decline in CME cheese markets, the Class III futures presented a more mixed outlook. The September contract fell by 19 cents to $21.79 per hundredweight, while Q4 futures showed modest gains, settling at $21.33 per hundredweight, up by a dime.
The USDA’s Cold Storage report, which leaned bullish, highlighted a faster-than-average reduction in both cheese and butter inventories for July. Total cheese stocks fell to 1.407 billion pounds, a 5.8% year-over-year decline (down 85.9 million pounds) and a 0.7% month-over-month drop (down 10.2 million pounds). This decline outpaced the five-year average monthly decrease of 6.4 million pounds, indicating a tighter cheese supply.
Butter inventories also reflected a notable shift, with total stocks at 353.8 million pounds. While this represents a 7.4% increase compared to 2023 (up 24.5 million pounds), the month-over-month decline of 6.1% (down 23.0 million pounds) was significantly steeper than the five-year average decline of 8.4 million pounds, underscoring a rapid reduction in available butter supplies.
The unexpected drops in cheese and butter inventories are likely to influence market dynamics in the coming months, as producers and traders adjust to tighter supplies and potential price volatility.
