Today’s cold storage report from USDA reported butter stocks down 5 percent from the previous month, but up slightly from one year ago.
Officials at FCStone say this report is bearish in relationship to their predictions.
“Butter inventories rose 21.01% from last year to 179.04 million lbs. versus our expectations of 2.14% growth or 151.12 million lbs. A month-to-month drawdown of 4.53% was also less severe than our expectations of a 19.40% decline,” they said.
According to FCStone the fact that stocks grew as much as they did is evidence that many end-users finished their holiday purchasing earlier than normal this year. “All of this would lead to the logical conclusion that the price of butter is in jeopardy at, say, $2.20 let alone $2.90,” they said concluding that the report may not mean anything for the markets tomorrow.
Cheese stocks were also reported to be down slightly month over month but 15% higher than last year.