When all was said and done, milk and dairy product sales during first half of 2015 were virtually unchanged from one year earlier. In other words, flat.
Yes, there were some bright spots. But when we add everything up, the net increase was a mere 0.6%. That said, first-half 2014 commercial disappearance (our best gauge of sales) was up a robust 3.4%.
Consequently, this year’s “positive” first-half commercial disappearance is, in fact, remarkable. Historically, we’ve never seen a positive number one year after an increase of three percentage points or more.
Let’s look under the hood and see what’s been happening. Prices in the U.S. have generally been at a premium to world prices all year. Given this disadvantage, export shipments have suffered. They’re down from one year ago across all product lines, but are not in the tank.
U.S. exporters have also faced the headwinds of lower oil prices; thus, less demand from oil-producing/exporting counties. Lower gasolines prices at the pump in the U.S. have helped drive
Demand in the foodservice channel is also helping prices. Bring on those cheeseburgers and pizzas. While McDonald’s grabs headlines about its sales woes, its competitors have been busy racking up sales increases.
Bottom line: The commercial disappearance of cheese was up 1.3% January through June of this year after being up 4% during the same period in 2014. There was some slippage in sales during the third quarter, but brokers and distributors are talking about a gangbuster fourth quarter.
Commercial disappearance of butter was a mess through the first six months of this year (down 7.6%). Preliminary evidence is suggesting very good sales during the third quarter, and I’m sensing more of the same in the fourth quarter.
The other components of the milk price—nonfat dry milk and whey—experienced strong sales growth through the first half of 2015, but production simply overwhelmed demand. Disappearance of nonfat dry milk/skim milk powder was up nearly 10% and whey was up more than 6%.
Exports of both products held up well through the first half of 2015, but movement in the second half has been and will continue to be lackluster. The world is awash in milk powders, here and abroad. Beverage milk sales have continued to slip despite the uptick in whole milk sales.
During calendar 2014, the commercial disappearance of all milk and dairy products was up 2.1%. My crystal ball has 2015 disappearance up 1.2%. With that in mind, “flat” isn’t so flat after all.