Tuesday, May 10, 2016

U.S. Cheese Stockpile Hits 30-Year High

The Chinese have their Strategic Pork Reserve, The Indians ditto with rice and apparently the U.S. stockpiles cheese.
From Bloomberg, April 29:

The U.S. Is Sitting on a Mountain of Cheese
Move over bacon, we have a new food glut to deal with.
When bacon was abundant it was everywhere: in your jam, on seemingly every burger, even flavoring bourbon. So if history is any guide, this year's food trend should be extra cheese. 
The reason is the U.S. is sitting on more butter and cheese than it knows what to do with, and the Europeans are to blame.
Exports from the European Union have climbed so far this year and last -- even after the bloc's once-largest customer, Russia, banned trade in retaliation for sanctions over its incursion in Ukraine. A glut of milk, plunging prices and a weakening euro mean the EU has been able to grab customers in Asia and the Middle East, while U.S. sales have fallen.

European dairy products are so cheap right now that the U.S. itself has become the new No. 1 customer for some products -- imports of EU butter doubled last year and rose 17 percent for cheese, according to the European Commission. All that excess supply is building up in U.S. refrigerators, especially as American dairy production heads to a record this year.

USDA statistics show cheese inventories at the end of March were the highest for the date since 1984, the year Prince's "Purple Rain" was released. More than half of the supply is American cheese, while Swiss accounts for about 2 percent, and the rest the government classifies as "other."

 "It's been difficult for them to export, given the strong dollar, and they're sucking in imports," said Kevin Bellamy, a global dairy market strategist at Rabobank International in Utrecht, the Netherlands. “Where the U.S. has lost out on business, Europe has gained.”...MORE
HT: Modern Farmer

In last August's "International Cheeze Cartel Busted In Russia" I recounted an adventure in cheese:

..."Ironically, Milk Futures Are Not Very Liquid":
We don't have many posts* on the dairy business, every couple years or so I break out the "What's Mooving" headline but the business, at least the way (whey?) it's structured in the U.S. is tough to trade from a portfolio perspective. In addition it seems to foment (ferment?) some simply awful puns in folks who write about it.

The futures are currently in backwardation, not that anyone cares....
*Back in 2010 we had a post, "CME Group expands dairy complex with cheese futures" which I intro'd with:
Years ago I heard of a Chicago company that made a whey-based artificial cheese. 
Apparently the operation was headed by a mad scientist type who had come up with the formula but had no marketing ability.

He was producing the stuff and not selling any, converting all the investors cash into this "analog" goop and storing it in Chicago area warehouses.

Then the Chernobyl reactor blew, the price of whey skyrocketed, I've no idea what the connection was, the company went broke and the receivers opened the warehouses to find tons of this 'cheeze', semi-molten in the summer heat.

That's what I thought of when I saw this story, tons of the stuff oozing out of bonded warehouses. No connection of course, just a visual....