MD_DA950
DY, DAIRY
MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
December 7, 2012 MADISON, WI (REPORT 49)
CME GROUP CASH MARKETS (12/07):
BUTTER: Grade AA closed at $1.5900. The weekly average for Grade AA
is $1.5870 (-.0505).
CHEESE: Barrels closed at $1.6600 and 40# blocks at $1.7600. The
weekly average for barrels is $1.6810 (-.0705) and blocks, $1.7600 (-
.0520).
BUTTER HIGHLIGHTS: Butter prices increased on CME trading this
Wednesday for the first time in 18 trading sessions and rose again
Thursday, closing the week at $1.5900. Churning in the West is
somewhat above expectations, where cream remains readily available and
club store sales are excellent with heavier orders coming in. Central
butter production is active, using primarily internal cream. Butter
inventories are building seasonally but interest for December is
sluggish and generally lower than projected by some manufacturers.
Northeast butter production has slowed and butter inventories are
level to slightly increasing. The Kansas City Commodity Office
announced this week, the award of solicitation AG-DPRO-S-13-0034, for
533,520 pounds of salted print butter for domestic food distribution
programs. The price range for the award is $1.9568-$1.9812.
According to the ERS Commercial Disappearance report, butter
disappearance for the first nine months of the year totals 1.33
billion pounds, up 3.1% on a daily average basis or an increase of
44.2 million pounds from 2011. According to the NASS Dairy Products
report, U.S. butter production in October totals 145.7 million pounds,
up slightly from last year and up 6.8% from last month. Cumulative
butter output for the first ten months of the year totals 1.54 billion
pounds, up 3.4% from the same period in 2011. The increase is equal
to 50.3 million pounds of butter. Cooperatives Working Together (CWT)
has accepted requests for export assistance to sell 1.058 million
pounds (480 metric tons) of butter. The product will be delivered
December 2012 through February 2013. During 2012, CWT has assisted
member cooperatives in making export sales of butter totaling 70.5
million pounds and anhydrous milk fat totaling 127,868 pounds.
CHEESE HIGHLIGHTS: Milk supplies available for cheese
manufacturing have increased and cheese plants are working additional
hours to accommodate the increased volumes. The surge of milk from
the holiday combined with increasing yields of fat and protein have
built cheese inventories in the short run. Prices at the CME Group
are steady to lower in daily trading this week. Blocks are mostly
steady with barrels selling lower on most days. The block/barrel
price spread on Thursday and Friday was a full 10 cents. Barrels
closed the week unchanged at $1.6600 and blocks were unchanged at
$1.7600. Buyers continue to place orders for immediate needs, but are
cautious about building new inventories until price levels are better
determined. The lower prices have increased inquiries from aging
programs and export buyers, but sales remain slow. The CWT program
assisted with 1.3 million pounds of export sales this week. NASS'
Dairy Products report for October had total cheese production up 3.2%
from last year. Cumulative production for 2012 was reported to be
2.6% above comparable 2011 production.
FLUID MILK: Midwest farm milk production is increasing steadily,
following typical November/December trends. Components are variable
from week to week but processors indicate the overall trend on
components shows a seasonal increase. Spot milk load availability
increased substantially this week. Milk handlers point to two major
reasons for the sudden increase in milk availability: cheese market
volatility and mechanical issues at some Central plants. California
milk production is slowly building along expected seasonal patterns.
Overall production is behind year ago levels as dairy farmers continue
to struggle with profitability issues. Fewer cows in the state and
low cost rations have lowered production from last year.
Manufacturing capacity is still above current milk supplies. Arizona
reports milk production is increasing slowly. Overall supplies are
behind a year ago, but catching up. Favorable weather in New Mexico
has boosted milk production slightly. Supplies are still below year
ago levels. Fewer cows and lower cost rations are holding production
back. Processors report adequate milk supplies for current needs.
Milk production in the Pacific Northwest remains near the seasonal
bottom. Financial margin stress is not helping output to move higher
very fast this fall/winter. Coastal moisture is making its way to
Utah and Idaho. Any moisture is always welcomed in the High Plains
region. Some contacts are noting that hay is a bit more available in
the region this year and the quality is quite good. Due to great
weather, some growers were able to get an extra cutting. Very little
hay was rain damaged. A new plant in the region is just beginning to
run some milk as an early test of how the plant is operating and
another plant is putting the finishing touches on another churn for
the region. Milk from the farm remains at a low point seasonally.
Cream supplies are building in the West with most of the excess
finding a home with butter churns. Manufacturing milk supplies in the
Northeast and Mid-Atlantic regions are down from last week, but above
levels prior to the Thanksgiving holiday. Class I demand has leveled
off this week. Milk production in both regions is increasing, but
the increases compared to a year ago are trending lower. Milk
production in Florida is increasing as seasonally mild temperatures
have improved cow comfort levels. Southeast milk supplies are nearly
in balance with demand. Most auxiliary manufacturers are being held
to their contract minimums. Class I demand has leveled off this week.
Cream supplies are having a problem finding a home.
DRY PRODUCTS: Central nonfat dry milk prices are unchanged on
the mostly price series for the week. Market participants continue to
state end users' interest in acquiring nonfat dry milk for the near
term has reached a plateau. Eastern nonfat dry milk prices held
steady on the low/medium heat mostly range and moved higher on the
high heat range this week. Production of nonfat dry milk has leveled
off from the influx of milk over the Thanksgiving holiday. Western
NDM prices for low/medium heat product are steady to higher. Contract
pricing indices moved fractionally higher and moved the bulk of
pricing higher. Spot demand is light as buyers are in a wait and see
attitude until first quarter of 2013 in many cases. On the Central
dry buttermilk range, prices are unchanged to one cent higher. Dry
buttermilk production is active in the Central region as various Class
IV plant operators indicate internal cream supplies are building
seasonally. Dry buttermilk prices in the East edged marginally higher
on the lower of the range. Production of dry buttermilk has declined
as a number of butter makers have filled or have nearly filled their
holiday orders. Western dry buttermilk prices firmed slightly. The
market has a mostly steady tone with contract indices moving some
prices slightly higher. Western whey prices ranged from steady to
higher with a continued firm undertone noted. Producer inventories
range from light to balanced. Central dry whey range prices are both
lower and higher on a mixed market. A few manufacturers indicate they
price incentivized some sales to help clear inventories prior to the
start of 2013, while also finalizing 2013 contract agreements with
usual price premiums in place. Northeast dry whey prices continue
moving to higher price levels, supported by transactions based on
various price indices. Dry whey production remains steady. Prices
for lactose this week are unchanged. Contracting for 2013 is in
varying stages of completion ranging from bids being sent out to some
annual and Q1 volumes/prices locked in. Prices for whey protein
concentrate 34% are steady on both the range and mostly series. The
number of manufacturers offering spot loads diminished this week and
spot load pricing has firmed for the present. Dry whole milk prices
are unchanged to lower as pressure on the butterfat market works into
dry whole milk pricing calculations. In addition, market participants
indicate fresh production from New Zealand is available at competitive
prices.
INTERNATIONAL DAIRY MARKET NEWS (DMN): Milk production in
Western European countries generally hit the seasonal low points
around mid-November and current production is trending steady to
slightly higher. Milk in total is indicated to be flat to lower in
recent months when compared to year ago levels, bringing the
cumulative season to date output totals to around 1% higher. Milk
prices are high, but input costs are limiting profitability and
growth. Dairy farmers have been protesting milk quotas and prices
below cost of production. Dairy product prices are steady to slightly
higher. The year-end holidays are creating retraction of marketings
as export buyers adjust ordering. New business orders are quiet.
Much of current trading is for 2013 deliveries and negotiations are
taking place for Q1 and beyond. Production of dairy products is at
seasonal low levels. PSA program butter stocks are reentering the
market on a consistent basis and that butter is being readily absorbed
and not impacting market conditions. Current butter prices are high
and restricting exporting into world markets. Eastern European milk
production trends are continuing with current output levels generally
at or slightly past the seasonal low point. Milk production is
reported to be higher than year ago levels in many Eastern countries.
Milk output is strong in Poland with reported levels well over year
ago marks. Demand for milk and dairy products is good to fill local
and export needs. Overall stocks of finished products are light. NEW
ZEALAND milk production is retreating slowly from the seasonal peak,
yet trends are higher and keeping pace with the 4 - 5% range above
year ago levels for the season. Weather conditions are generally
favorable with adequate moisture and moderate temperatures for pasture
regrowth. Recent conditions have been variable but not detrimental to
milk output. Outlook for warm and dry summer conditions are
favorable. Cow numbers are higher than year ago levels. Forage
quality and quantity are in good shape for milk cow needs and
generating good milk volumes, fat levels, and milk solids. Processing
plants are running on seasonally active schedules to handle the
current milk intakes with overall levels trending down slightly,
matching the milk intakes. The product mix is being generated along
planned schedules. AUSTRALIAN milk production reports showed output for
October at a 1.4% decline from October 2011 with the production season
output running at 1.0% higher than year ago levels. The seasonal
growth rate is highest in the Victoria region (+1.8%) but lowest in
the Queensland region (-3.5%) when compared to the prior season.
Trade sources are indicating the milkfat levels are lower than
projections. Hot weather last week was short lived and did not create
any longer term issues with milk production. Some areas are impacted
by wet conditions, while other areas are drying out. Processing
capacity is adequate to handle current milk supplies and the product
mix is along planned levels. The cheese market is pulling more milk
into cheese production to service domestic and active export accounts.
Negotiations are taking place for Q1 needs. Average prices at the
latest g/DT auction on December 4 and changes from the previous event
are: anhydrous milk fat $3197, +3.7%; Buttermilk powder $3,615, n.a.;
cheddar $3,372, -2.4%; milk protein concentrate $5,958, -1.2%; rennet
casein $7,926, +0.3%; skim milk powder $3,362, -1.0%; and whole milk
powder $3,170, -3.5%. The next event, #82 will be held on Tuesday,
December 18.
NOVEMBER CLASS AND COMPONENT PRICES (DAIRY PROGRAMS): The
following are the November 2012 prices under the Federal Milk Order
pricing system and the changes from the previous month: Class II
$18.81 (+$0.37), Class III $20.83 (-$0.19), and Class IV $18.66
(+$0.12). Product price averages used in computing Class prices are:
butter $1.8410, NDM $1.5143, cheese $2.0146, and dry whey $0.6480.
The Class II butterfat price is $2.0288 and the Class III/IV butterfat
price is $2.0218. Further information may be found at:
www.ams.usda.gov/AMSv1.0/PriceFormulas2012
OCTOBER 2012 DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production
was 145.7 million pounds, slightly above October 2011 and 6.8% above
September 2012. American type cheese production totaled 370.6 million
pounds, 5.1% above October 2011 and 6.1% above September 2012. Total
cheese output (excluding cottage cheese) was 927.9 million pounds,
3.2% above October 2011 and 6.3% above September 2012. Nonfat dry
milk production, for human food, totaled 95.0 million pounds, 5.6%
below October 2011 but 12.4% above September 2012. Dry whey
production, for human food, was 72.3 million pounds, 1.4% above
October 2011 and 3.3% above September 2012. Ice cream (hard)
production totaled 64.0 million gallons, 6.1% above October 2011 and
11.3% above September 2012.
NOVEMBER AGRICULTURAL PRICES (NASS): The All Milk price received by
farmers was $22.10 in November, up $0.60 from October 2012 and up
$1.60 from November 2011. The alfalfa hay price was $215.00 in
November, up $22.00 from November 2011. The corn price was $6.71 in
November, up $0.88 from November 2011. In November, the soybean price
was $13.80, up $2.10 from November 2011. The milk-feed price ratio
was 1.79 in November, down 0.10 from November 2011. The index of
prices received by farmers for dairy products during the month of
November 2012 was up 4 points to 169. Compared with November 2011,
the index was up 12 points (7.6%). The index of prices paid by
farmers for commodities and services, interest, taxes, and wage rates
in November 2012 was down 1 point to 217. Compared with November
2011, the index was up 11 points (5.3%).
1200CT Eric.Graf@ams.usda.gov 608.278.4153
National Dairy Market At A Glance
Related Articles
No matching related articles at this time.
Comments (0) Leave a comment