CPI for Dairy Products Down in February

US - The Consumer Price Indices (CPI) for dairy products fell in February 2012 vs. the prior month but are still higher than the prior year for whole milk and cheese (see chart below). Only the butter CPI was lower vs. the prior month and vs. the prior year, writes Mary Ledman, Sara Dorland, Sarina Sharp and Karen Endres on Tuesday 10 April 2012.
calendar icon 11 April 2012
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The butter CPI fell 2.3 per cent in February 2012 and was 3.6 per cent less than February 2011.

The CPI for whole milk and cheese decreased 1.1 per cent and 0.4 per cent, respectively during the month. Nevertheless, the cheese CPI remains 7.1 per cent higher than February 2011, and the whole milk CPI is 10.0 per cent greater.

Higher retail milk prices and price sensitive consumers have likely contributed to lower fluid milk sales.

According to USDA, estimated US sales of fluid milk products in 2011 totaled 53.7 billion pounds. That was 1.7 per cent less than 2010 sales which were 1.5 per cent lower than 2009 sales.

Unfortunately 2012 is not off to a good start. January 2012 estimated sales of fluid milk products are down 2.7 per cent vs. January 2011 (see chart). As sales of fluid milk products decrease, more milk is converted into other dairy products.

In 2011, the 1.7 per cent reduction in sales of fluid milk products translated into over 910 million pounds of milk manufactured into other dairy products. The CME spot Cheddar cheese market was active today with six loads of barrels trading at the market and a single bid for block cheese was left on the board. Cheese closed unchanged. CME spot butter settled 0.5¢ lower on a trade at $1.4250/lb. Two offers and a bid were left on the board.

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