MD_DA950
DY, DAIRY
MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
November 21, 2012 MADISON, WI (REPORT 47)
CME GROUP CASH MARKETS (11/21):
BUTTER: Grade AA closed at $1.6900. The weekly average for Grade AA
is $1.7033 (-.1627).
CHEESE: Barrels closed at $1.7450 and 40# blocks at $1.8250. The
weekly average for barrels is $1.7308 (-.0572) and blocks, $1.8250(-
.0290).
BUTTER HIGHLIGHTS: The CME cash butter price continues to trend lower.
During this holiday shortened trading week, cash butter declined 10 1/2 cents
to close the week on Wednesday at $1.6900. This cash price compares to
$1.8900 a week ago, $1.8800 a month ago, and $1.6300 last year at this time.
Churning schedules across the country remain quite active, although more
butter producers are closely monitoring their current production trends in
conjunction with inventories and demand. Many butter producers are only
churning with regular sourced cream volumes. Some additional churning will
probably occur during the upcoming Thanksgiving holiday weekend, especially
if cream is attractively priced. By midweek, cream pricing multiples were
starting to ease. Butter demand slowed this week as Thanksgiving orders were
previously placed and shipped, although some last minute fill-in orders were
reported early in the week. Butter producers and handlers were very pleased
with Thanksgiving orders and look forward to an equally active end of year
demand.
CHEESE HIGHLIGHTS: The holiday shortened week saw daily cheese
prices at the CME Group steady to higher. Cheese prices continued to
trend lower overall as weekly average prices have declined for three
weeks. The sharply lower prices have been welcomed by buyers, but
many are hesitant to order too far ahead until prices have developed a
more consistent pattern. The lower prices have increased export
interest as prices move closer to international levels. The CWT
program continues to aid in export sales with 111.1 million pounds of
cheese receiving assistance for the year. Manufacturing milk volumes
are higher for the holiday shortened week as Class I demand is
reduced. Cheese plants are taking advantage of the increased milk to
raise their inventories. The holiday shortened week had only three
trading days as the CME Group was closed for Thanksgiving and the next
day. Barrels closed the week on Wednesday at $1.7450 and blocks were
at $1.8250. No sales were reported for the short week.
FLUID MILK: While factoring in lower cow numbers in some states,
milk production in the southern tier of states is close to turning the
corner on a new production season. Some northern tier states, such as
Idaho and Utah, noted increasing intakes as dairy herds in those
states grow. Milk usage is following the established extended holiday
weekend pattern this week as fluid demand declines, sending more milk
into manufacturing. Manufacturers in each region expected all farm
milk intakes would find processing room. Cream is plentiful this
week, but with few takers, multiples moved lower. Ice cream plants
are just keeping pace with orders, and are not looking to build
inventory at this time. The same is true for several butter
manufacturers. However, cream interest for cream cheese, dips, sour
cream and whipping cream is starting to increase as manufacturers of
those products have a short window to complete and ship December
holiday orders.
DRY PRODUCTS: Nonfat dry milk prices firmed this week.
Buttermilk prices in the West moved higher, but Central prices moved
lower on the bottom of the range as weaker butterfat pricing is
factored into marketing information. Lactose prices are steady, with
contracts shipping making up the bulk of activity. Dry whey prices
moved higher, following the lead of variable indices used as price
bases. Buyers generally are satisfying only near term needs. Whey
protein concentrate 34% prices are unchanged on the mostly price
series. Lower priced WPC 34% spot loads were absent from the market
this week. Buyer resistance to firm pricing trends is being noted by
manufacturers.
INTERNATIONAL DAIRY MARKET NEWS (DMN): Milk production in Western
Europe is at or very near seasonal low levels. Producers and handlers are
speculating that October milk production will trail previous year
comparables, but cumulatively, will continue to run slightly ahead of last
year. September figures indicated that output was 1.8% lighter than
September 2011 although cumulative production was running 1.2% heavier for
the first 9 months of the current calendar year. Farmers are now stabling
their milking herd for the winter months. Feed supplies will be challenging
for many producers during the winter season. Stocks of manufactured dairy
products are not readily available. Cream supplies are tight. Traders and
handlers are indicating that new buyer interest for the balance of the
calendar year is minimal with most of this need secured or at least
negotiated earlier in the fall. Most current sales activity is centered
around first quarter 2013 needs. PSA butter stocks continue to clear back
into the marketplace. As of late October, about half of the 130,000 MT of
PSA butter has been cleared from the program. Traders and handlers estimate
that about 5% of the total returns to the marketplace on a weekly basis. The
return of this butter is having minimal negative impact on current market
conditions as most of this butter has already been spoken for. Many traders
are indicating that this PSA is quite welcomed this year as commercial butter
stocks are not that readily available. These volumes are supplementing needs
that would otherwise be in the commercial market competing for limited butter
offerings, further tightening butter supplies.
Milk production in Eastern Europe is near low seasonal levels, but is
running slightly better than their Western European counterparts. Eastern
European milk production has been quite positive in comparison to Western
production for much of the season, but the margin of strength is narrowing.
Weather conditions in Eastern Europe are typical for late fall and are not
significantly detrimental to late season milk output. Milk volumes have
declined to the point that most manufacturing facilities have shuttered their
operations for the winter months and fresh dairy product needs are easily
absorbing available milk volumes. Stocks of manufactured dairy products are
tightening.
The Oceania milk production season is past its' peak, declining
slightly, but holding at seasonally high levels. The buildup to peak levels
was very typical for the region and occurred slightly earlier than in past
years. The next question is, how long will stability at high levels prevail
and what will the pace of decline on the downside be? Milk producers and
handlers were pleased with the seasonal buildup, but more important to the
Oceania region is how the downhill side of the season develops. At this
point, milk production trends are running heavier than last year and milk
producers and handlers are hopeful that this trend will continue for quite
some time. Early on in the current production season, milk volumes were
running quite strong when compared to comparable time periods last season.
Now at peak, percentage comparables have eased, but remain positive. In New
Zealand, milk production is reported to be running 4 - 5% ahead of a year ago
while in Australia, output is running 2 - 3% ahead. The Gippsland region of
Australia continues to struggle with excessive moisture. This is the second
year of too much moisture, but farmers in the region are making the best of
an unsettled situation by controlling costs. With milk production at
seasonally high levels in both New Zealand and Australia, manufacturing
facilities are at or very near peak levels, thus milk volumes are clearing to
all products with no targeted manufactured dairy product getting a milk tilt
at this time. Manufacturers are indicating that often at peak levels,
production surpasses demand thus uncommitted stocks are being generated.
Although heavy production is being reported, traders and handlers are not
indicating that significant volumes of uncommitted stocks are available.
Often manufacturers hold onto these uncommitted stocks as a cushion for
future needs. Average prices at the latest g/DT auction on November 20 were
mixed with anhydrous milk fat and cheddar firm while all other traded
products were steady to lower. Cheddar cheese averaged $3,436 per MT, a
12.4% increase from the previous all contract average with skim and whole
milk powder averaging 1.7% and 1.9% lower. U.S. sourced skim milk powder
averaged $3,352 per MT which was 4.3% lower than the November 6th event for
comparable product. The next event, #81 will be held on Tuesday, December 4.
OCTOBER MILK PRODUCTION (NASS): Milk production in the 23 major
States during October totaled 15.2 billion pounds, down slightly from
October 2011. September revised production at 14.7 billion pounds, was
down 0.6% from September 2011. The September revision represented a
decrease of 19 million pounds or less than 0.1% from last month's
preliminary production estimate. Production per cow in the 23 major
States averaged 1,791 pounds for October, 1 pound above October 2011.
The number of milk cows on farms in the 23 major States was 8.47
million head, 10,000 head less than October 2011, and 8,000 head less
than September 2012.
OCTOBER FMMO MARKETING AND UTILIZATION (DAIRY PROGRAMS): During
October, more than 8 billion pounds of milk were received from
producers. This volume of milk is 20.5% lower than the October 2011
volume. In October 2011 and October 2012, there were volumes of milk
not pooled due to intraorder disadvantageous price relationships.
More than 3.8 billion pounds of producer milk were used in Class I
products, 2.7% higher than the previous year. The all-market average
Class utilization percentages were: Class I = 45%, Class II =18%,
Class III = 28% and Class IV = 9%. The weighted average statistical
uniform price was $20.55 per cwt., $1.35 higher than last month and
$0.98 higher than last year.
1200CT janet.linder@ams.usda.gov
National Dairy Market At A Glance
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