What we’re seeing this week
Another week, another GDT event. Auction #294 recorded a 2.2% rise in the overall index, but again fell short of the promise offered by futures markets in the lead up. Some interesting dynamics under the headline results – as always. The premium for Kiwi-sourced SMP was erased this event, which has only happened a few times in GDT history.
Chinese buyers also returned to GDT this week, accounting for around half of the purchases of both powders. They are still picking up some bargain-priced WMP based on the underlying fat and protein values. We take a look at the dynamics that will likely keep those values high.
Chart of the week
This week, there’s not one but two charts of the week. Between January and August, commercial American cheese disappearance rose 6.2% over the 2020 comparable. That compares to a 2.9% lift in commercial disappearance of other cheese varieties (including mozzarella) over the same 8-month period.
In terms of stocks-to-use at the end of August, American cheese stood at 55.2, up 3.7% from the prior month and 2.8% from the same month last year. Butter was at 58.2 at the end of the month, down 13.4% from July and 16.8% from the 2020 comparable.
Butter commercial disappearance rose by 2.9% for the year to August, despite a weak April-June period – this mostly reflected strong prior-year comparables when retail sales surged during COVID lockdowns.
Among other key dairy products, domestic commercial disappearance of NFDM/SMP continues to be patchy but still trending lower, falling 23.5% for the year to date and 63.5% in August.
The Census Bureau reported a 14.1% YOY increase in “limited service eating places” sales for August, following a 17.2% expansion in July. Sales in this category were 4.1% lower than the prior year comparable in 2020, reflecting the impact of COVID lockdowns and outlet closures on revenue.
Full-service restaurants are also making a big comeback, increasing YOY in every month since March, but on particularly low COVID-impacted 2020 comparables. Full-service restaurant sales were 45.5% ahead YOY in August. After falling YOY in the March-May period, grocery store sales increased in each month since, with a 5.5% expansion in August.
Advance estimates for September 2021 suggest foodservice and drinking place sales were 29% ahead relative to the 2020 comparable. In the same month, grocery sales were up 7% YOY, the same expansion as in August.