MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
December 14, 2012 MADISON, WI (REPORT 50)
CME GROUP CASH MARKETS (12/14):
BUTTER: Grade AA closed at $1.5950. The weekly average for Grade AA
is $1.5940 (+.0070).
CHEESE: Barrels closed at $1.6250 and 40# blocks at $1.7250. The
weekly average for barrels is $1.6440 (-.0370) and blocks, $1.7460
BUTTER HIGHLIGHTS: Butter production is active throughout the
country as cream use for ice cream, sour cream, dips, and other
holiday related items declines seasonally. Many manufacturers are
churning only their internal cream supplies as they wait for the
anticipated decline in cream multiples to allow for profitable
purchase/production/packaging/storage. Cream multiples vary from
region to region, but are decreasing steadily as the end of the year
approaches. Domestic demand is tapering off as most stores have
stocked up for holiday shopping. Butter prices on the CME regained
one-half cent early in the week, and held that gain through the
remainder of the week.
CHEESE HIGHLIGHTS: Cheese production in the United States is
increasing as more milk is finding its way to Class III plants.
Manufacturers are surprised at much of the increased volume.
Increased milk volumes in the East and Midwest have plants expanding
their schedules. Western manufacturers are seeing steady to slowly
increasing volumes. Better than expected component levels are adding
to cheese yields. Holiday sales and shipping have slowed. Lower
wholesale prices over the last month have allowed plants to put more
cheese into aging programs. The Foreign Agricultural Service reported
quota imports of cheese for January-November 2012 total 160.5 million
pounds, up 6.6% from a year ago. Exports of cheese for January-
October 2012 total 486.6 million pounds, up 20% from the same period a
year ago. Exports account for 5.4% of U.S. production. The CWT
program has assisted with exports of 115.7 million pounds so far this
year. Retail ads for cheese as reported in the National Dairy Retail
Report increased this week, up 37.4% from two weeks ago. Cheese
prices at the CME Group this week were lower as the week wore on.
Barrels closed Friday at $1.6250, down $.0350 from last Friday's
close. Blocks closed at $1.7250, down $.0350 from last Friday.
FLUID MILK: Manufacturing milk supplies are increasing in the
Northeast and Mid-Atlantic regions. Class II demand has slowed as
many holiday products have been shipped. Out of state shipments of
Florida milk have increased recently as production builds. Milk
production in the Midwest is increasing on a seasonal basis.
Manufacturers are cautious to take on additional loads unless
discounts under Class are offered. Processors are preparing for
increased offerings over the upcoming holidays. Milk volumes in the
West are slowly increasing, but are below year ago levels in many
cases. Dairies in California are having a difficult time maintaining
profitability. The CDFA announced a public hearing on December 21 to
consider amendments to the Class 1,2,3,4a and 4b prices for a period
not to exceed six months. Cream is available and supplies are
exceeding demand as manufacturers finish production of holiday items.
Multiples are weak as butter churns are looking to lower input costs
before putting butter into inventory.
DRY PRODUCTS: Nonfat dry milk prices are mixed with instances of
higher and lower sales being made. Contract prices firmed following
pricing indices, while some spot sales to clear inventory were
offered. Demand is moderate as most needs have been met for year end
production. Schedules are allowing time for production of high heat
NDM. Much of this will go to inventory for 1Q needs. Plants
anticipate heavier volumes of skim milk over the holiday period.
Stocks of NDM are adequate and being held with confidence. Buttermilk
prices are mixed as interest for additional product before the end of
the year is waning. Increased churning of butter is increasing the
supply of buttermilk solids. Dry whey prices were unevenly steady.
Contract prices increased marginally, but there is evidence of
pushback as buyers inventories are increasing. Export prices are
significantly lower than domestic price levels. Export sales account
for 48% of U.S. production. Exports of dry whey for January-October
of this year total 407.3 million pounds, down 9% from the same period
last year. Whey protein concentrate 34% prices are mostly unchanged
with a weak undertone being expressed. Demand for year-end purchases
is light. Lactose prices are steady to weak. Supplies of lactose are
building and buyers are looking for discounts to make additional
purchases. Export sales for January-October of 2012 total 311.1
million pounds, a 14% decrease from last year.
ORGANIC DAIRY MARKET NEWS (DMN): Total Organic Milk Products
sales for October 2012, 194 million pounds, were up 8.3% from October
2011. Organic Whole Milk sales for October 2012, 50 million pounds,
were up 14.6% compared with October 2011. Organic Fat-Reduced Milk
sales for October 2012, 144 million pounds, were up 6.3% compared with
October 2011. The national weighted average advertised price of
organic milk half gallons, $3.83, is 31 cents higher than two weeks
ago. The price range is $2.99 to $4.99, unchanged on the bottom of
the price range and 30 cents higher on the top. The current national
organic half gallon milk weighted average advertised price of $3.83
compared with the weighted average advertised price for non-organic
half gallons, $2.76, yields an organic-conventional half-gallon milk
advertised price spread of $1.07, compared with $0.67 two weeks ago.
All ads for organic yogurt in 4-6 ounce containers are priced $1.00.
While this price has been previously reached during many weeks as a
high price, never before since this data series began during the Fall
of 2009 has $1.00 been the only price advertised and hence, the
national weighted average advertised price. All ads are for national
brands. As with the last several reporting periods, the lowest price
for organic butter, $3.99, equals the highest price for conventional
butter, $3.99. Organic dairy advertising volume this survey period
increased to the highest level since the first week of October.
Organic milk ads significantly dominate organic dairy ads, appearing
in greater numbers than any cycle since the first week of September.
Organic yogurt ad volume continues a five period stretch of being
lower than the annual average.
NATIONAL DAIRY RETAIL REPORT (DMN): Butter ads "churned" ahead
in the home stretch to Christmas and Passover, increasing in number by
137% from two weeks ago and reaching the second highest level reported
this year. Overall ad volume for all products also increased, being
up by 40% from the last reporting period, reaching the fourth highest
level of this year. Butter weighted average advertised prices
declined from two weeks ago by 22 cents, to $2.84 for a 1# package.
Prices for butter ranged from $1.99 to $3.99, with the lowest price
found in the Northeast and Midwest, and the highest prices in the
Northeast. Cheese prices were mostly up, with only 8 ounce shredded
down, by 11 cents, to $2.29. The other cheese variety most featured,
8 ounce blocks, increased 10 cents to $2.53. Egg nog and cream cheese
ad numbers also increased significantly, with egg nog up 62.9% and
cream cheese up 56.5%. Egg nog average prices were $2.68 for quarts,
up 3 cents, and $3.32 for half gallons, up 11 cents. Cream cheese
average prices were down 13 cents to $1.47. Yogurt ad prices for 4-6
ounce containers declined 3 cents to an average of 43 cents for
regular yogurt, and declined 1 cent to 99 cents for Greek yogurt.
Yogurt ad numbers were up, being 93.8% and 41.3% higher, respectively,
for regular and Greek 4-6 oz. sizes. Sour cream feature prices
declined 9 cents to an average of $1.54. The national weighted
average advertised conventional milk price for half gallons this
period, $2.76, is 9 cents below two weeks ago but 6 cents above four
weeks ago. For Organic milk, the national weighted average
advertised price for half gallons is $3.83, up 31 cents from last
period but 3 cents lower than 4 weeks ago. This results in an
organic-conventional half-gallon spread of $1.07, compared to $0.67
two weeks ago and $1.16 four weeks ago.
SEPTEMBER MAILBOX MILK PRICES FOR SELECTED REPORTING AREAS IN
FEDERAL MILK ORDERS AND CALIFORNIA (AMS & CDFA): In September 2012,
mailbox milk prices for selected reporting areas in Federal milk
orders averaged $19.88, up $1.66 from the August 2012 average, and
down $1.51 from the September 2011 average. The component tests of
producer milk in September 2012 were: butterfat, 3.69%; protein,
3.09%; and other solids, 5.73%. On an individual reporting area
basis, mailbox prices increased in all Federal milk order reporting
areas from the previous month. Mailbox prices in September 2012
ranged from $22.39 in Florida to $18.87 in Indiana.
OCTOBER FLUID MILK SALES (AMS & FMMO): During October, 4.7
billion pounds of packaged fluid milk products is estimated to have
been sold in the United States. This was 1.9% higher than October
2011. After adjusting for calendar composition, sales in October 2012
were 0.6% lower than October 2011. Estimated sales of total
conventional fluid milk products increased 1.6% from October 2011 and
estimated sales of total organic fluid milk products increased 8.3%
from a year earlier.
DECEMBER SUPPLY AND DEMAND ESTIMATES (WAOB): The 2012 and 2013
milk production forecasts are unchanged from last month. Lower
forecast fat basis exports in 2012 reflect weakness in butter exports
but exports in 2013 are raised on higher expected cheese and whey
protein solids shipments. Cheese prices are forecast lower in 2012 on
current weakness but the forecast is raised for 2013 as demand is
expected to improve. Butter prices for both 2012 and 2013 are lowered
as demand is expected to remain relatively weak. Nonfat dry milk (NDM)
and whey prices are raised for 2012 and 2013. The Class III price for
2012 is reduced on the lower cheese price but the Class IV price is
unchanged as the lower butter price is offset by a higher NDM price.
For 2013, Class III and Class IV price forecasts are raised as prices
for cheese, NDM, and whey are increased. The 2012 all milk price is
unchanged from last month at $18.50 to $18.60, but the range of the
2013 price is tightened to $19.15 to $19.95.
1200CT Robert.Hunter@ams.usda.gov 608.278.4158
National Dairy Market At A Glance