MD_DA950
DY, DAIRY
MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
October 12, 2012 MADISON, WI (REPORT 41)
CME GROUP CASH MARKETS (10/12):
BUTTER: Grade AA closed at $1.9300. The weekly average for Grade AA
is $1.9310(-.0015).
CHEESE: Barrels closed at $2.0600 and 40# blocks at $2.1000. The
weekly average for barrels is $2.0600 (+.0120) and blocks, $2.1000
(+.0060).
BUTTER HIGHLIGHTS: The butter market price adjusted this week
after a sharp decline late last week at the CME Group. Demand for
print butter is strong as handlers and end users prepare for the
upcoming holiday season. Feature activity is fair to good in spite of
the relatively high wholesale pricing. Part of the explanation is
that butter has been bought/stored at lower prices or hedged at a
lower cost point. In some cases, butter is also used as a loss
leader. Interest from food service accounts is steady to trending
higher. Butter production is moderate to heavy. Print butter is
making up the majority of current output. Cream utilization has
slowed seasonally for ice cream accounts. Other Class II items are
seeing only incremental production increases. Butter holdings are
fair to good to meet current and future demand. Producers are
assessing stocks and projected production against buyers' needs with
the plan to have minimal inventories when the holiday needs are
filled. According to the NASS Dairy Products report, August butter
production for the U.S. totals 129.1 million pounds, down 3.5% or 4.7
million pounds from August of last year.
CHEESE HIGHLIGHTS: Wholesale cheese prices increased again this
week as weekly average prices at the CME Group move higher. This week
saw reduced activity at the CME Group as prices were steady and
trading was reduced. Cheese production, according to NASS' August
Dairy Products report, was 0.5% higher than July 2012 and 2.6% higher
than August 2011. Regionally, the Central region was higher while the
West was marginally higher than a year ago and down 3.7% from the
previous month. Tighter milk supplies in the West during August
slowed production. Manufacturers report that current inventories are
adequate for contracted needs with regular customers willing to take
additional production when offered. Buyers are filling holiday orders
with specialty cheeses in addition to traditional needs. Higher
prices have slowed export demand, but assistance from the CWT program
continues to move product offshore. Cheese sales at the CME Group for
the week were light as trading slowed this week. Barrels closed
unchanged for the week at $2.0600, while blocks closed at $2.1000,
also unchanged.
FLUID MILK: Milk production is steady to higher in the Northeast
and Mid-Atlantic regions, while Florida production is steady to lower.
Farm milk volumes in the Midwest are near seasonal lows and component
trends are slow to improve. California milk production is mainly
steady and processing plants are running at seasonal low levels.
Arizona milk output continues to move higher on a weekly basis, with
Class I demand steady to occasionally higher. Plants in New Mexico
are running on reduced seasonal schedules and milk production is
trending steady. In the Pacific Northwest, milk production is
trending near seasonal lows. Utah and Idaho milk supplies are mostly
steady. Dairy plants are operating at less than full schedules.
DRY PRODUCTS: Central and Eastern nonfat dry milk prices moved
higher at the low end of the range due to contract indices, while the
top end moved lower due to spot transactions. Pricing in the West
also declined at the top of the nonfat dry milk price range and
increased at the bottom. Central and east dry buttermilk prices are
unchanged while in the West, the range narrowed at both ends and the
mostly increased at the bottom. Dry whole milk prices are steady to
firm in a lightly tested market. Dry whey prices moved up. The top
and bottom of the range and mostly increased for both Central and
Western dry whey. In the Northeast, the top of the range increased.
Central and west lactose prices are steady, with the range and mostly
series having a fairly wide spread due to quality and mesh size
variables. Casein markets and prices are mixed as a new quarter
resumes and quarterly contract prices adjust.
INTERNATIONAL DAIRY MARKET NEWS (DMN): Western European milk
production levels are trending seasonally lower. Milk deliveries into
processing facilities are also tending to be declining. According to
trade sources, milk output is lower versus a year ago in Germany,
France, Netherlands and Ireland. Recent wet weather conditions have a
lingering effect on pasturing and cropping. Some countries are noting
declines in fat and protein levels of milk receipts, attributed to
changing feeding patterns on dairies. Cost of production issues are a
concern with farm milk pricing steady to incrementally higher.
Finished dairy product prices are steady to slightly weaker. Currency
fluctuations have only had a minimal impact on exporting in recent
weeks, but the current level versus the USD is being noted. Butter
exports are light and moving best to established accounts. There is
butter coming out of the PSA program to supplement supplies. SMP and
WMP prices are slightly lower with uneven demand into a competitive
world market situation. Interest in dry whey is light to fair with
current pricing levels stimulating demand. Eastern Europe milk
production trends are moving lower and approaching the low point of
the production cycle. Most countries report milk production levels
are above a year ago with Poland being 5% higher in August versus a
year earlier. The effects of weather are currently having minimal
impact on milk production across the region. Dairy product production
cycles are tending to be at seasonal low levels and stocks of finished
dairy products are light.
Milk production in New Zealand is at or very near peak levels in
many regions. Milk producers and handlers are indicating that a
strong finish to the previous season, good cow conditioning, and a
favorable start to the current season are all contributing factors to
a positive season thus far. Milk handlers are projecting that milk
output will probably not be as strong as last season, but will be in
the 3 - 4% increase range from two years ago. The Australian milk
production season is well underway and will peak in about three weeks.
Weather conditions in Australia may again be a factor for some
production regions of Victoria. Northern Victoria is experiencing a
positive start to the season with volumes reported to be running 6 -
7% ahead of last year at this time. In the Southeast, Gippsland
region, wet conditions prevailed for much of last season and it
appears that these conditions might be negatively impacting output
again this year. Elsewhere in Victoria, conditions are basically
normal and the milk flow is seasonally building. Australian producers
and handlers are continuing to project a positive season with most
anticipating a 1 - 2% increase over two years ago with some reaching
to the 3% level. Milk handlers are hopeful that peak levels will be
able to be maintained for an extended period of time, but peak levels
are typically fully dependent on weather patterns. In both New
Zealand and Australia, manufacturing facilities are all up and
running. Casein operations, especially in New Zealand, are also in
full swing and will remain at those levels as long as milk volumes are
plentiful. Milk volumes are clearing to all manufacturing facilities,
thus there is basically no tilt for milk volumes at this time,
although butterfat products are reported to be in the tightest
position. Stock levels of manufactured dairy products are basically
fully committed at this time. Some manufacturers do have uncommitted
volumes, but are often holding these volumes to be flexible with their
other commitments. Traders and handlers do indicate that they
continue to receive new inquiries from potential buyers, but often are
not able to fulfill the inquiry. At the present time, most all sales
activity is centered around regular and ongoing customer needs.
Average prices at the last g/DT auction on October 2 were generally
lower. Buttermilk and whole milk powder prices were firmer with all
other traded product prices easing. Although overall product prices
for skim milk powder were lower, U.S. sourced skim milk powder, for
November delivery, was 6.4% higher at $3,707 per MT. The next event,
#78, will be held on Tuesday, October 16.
OCTOBER MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The 2012 milk
production forecast is reduced from last month, as slower growth in
milk per cow more than offsets a slower expected decline in cow
numbers. Higher forecast milk prices in late 2012 and into 2013 are
expected to slow the rate of decline in cow numbers and help support
higher growth in milk per cow in 2013. Thus, the production forecast
for 2013 is raised. Imports are forecast higher for both 2012 and
2013. Fat basis exports for 2012 are lowered but skim-solids exports
are forecast higher. Exports for 2013 are unchanged from last month.
Product prices are forecast higher for 2012 and 2013 as recent
strength in dairy product demand is expected to carry into 2013.
Forecasts for butter, cheese, nonfat dry milk, and whey are raised
from last month. With higher product prices, both the Class III and
Class IV price forecasts are raised. The all milk price is forecast
at $18.50 to $18.60 for 2012 and $19.00 to $19.90 for 2013.
AUGUST FLUID MILK SALES (AMS): During August, 4.5 billion pounds
of packaged fluid milk products is estimated to have been sold in the
United States. This was 0.5 percent lower than August 2011. After
adjusting for calendar composition, sales in August 2012 were 0.5
percent lower than August 2011. Estimated sales of total conventional
fluid milk products decreased 0.9 percent from August 2011 and
estimated sales of total organic fluid milk products increased 9.8
percent from a year earlier.
*****SPECIALS THIS ISSUE*****
INTERNATIONAL MARKET NEWS (PAGES 8 - 8B)
DAIRY FUTURES (PAGE 9)
OCTOBER MILK SUPPLY AND DEMAND ESTIMATES (PAGES 10-11)
AUGUST FLUID MILK SALES (PAGE 12)
DAIRY GRAPHS (G1-G2)
RELEASE DATES FEDERAL MILK ORDER PRICE DATA (attached)
12:00 CDST eric.graf@ams.usda.gov
National Dairy Market At A Glance
Related Articles
No matching related articles at this time.
Comments (0) Leave a comment