MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
December 28, 2012 MADISON, WI (REPORT 52)
CME GROUP CASH MARKETS (12/28):
BUTTER: Grade AA closed at $1.4975. The weekly average for Grade AA
is $1.4975 (-.0600).
CHEESE: Barrels closed at $1.7100 and 40# blocks at $1.7400. The
weekly average for barrels is $1.6825 (+.0420) and blocks, $1.7400
BUTTER HIGHLIGHTS: Butter prices declined by 4 cents at the
beginning of the holiday week on light trading. Retail interest in
print butter is minimal as most holiday shopping needs were filled
earlier in the month. Bulk butter inventories are building steadily
as spot cream supplies continue to be readily available, with few
takers outside of churning operations. Manufacturers' inventories are
building seasonally. Some 82% production is scheduled for the next 7
- 10 days, to fill export interest. According to NASS's Cold Storage
report, manufacturers' inventories of butter at the end of November
totaled 127.1 million pounds, a 12% decrease from one month ago, but a
36% increase from one year ago.
CHEESE HIGHLIGHTS: Cheese production was higher this week as
increased volumes of milk were offered to cheese plants. Lower Class
I usage combined with some plants shuttered during the holidays
increased volumes of milk for manufacturing. Additional milk supplies
were offered below Class III levels, especially in the Midwest.
Cheese demand is lackluster for end of year purchases. The buyers are
taking a wait and see attitude in many cases until they feel that
prices have bottomed out. Export buyers are also watching price
movement. Advertised U.S. cheese prices as reported in the National
Dairy Retail Report were mostly lower except for shredded varieties.
Packages of 8 ounce shredded cheese were 3 cents higher from $2.29 two
weeks ago to $2.32 per package. November 30th stocks of natural
cheese in cold storage totaled 941.8 million pounds, down 1% from a
month ago and down 4% from a year ago. Cash cheese prices at the CME
Group this week were steady for blocks on no sales with barrels moving
higher on moderate sales. Blocks closed on Friday at $1.7400 and
barrels closed the week at $1.7100. Barrels and blocks had carried an
unusually large spread for the past three weeks. Late this week,
barrel prices increased to end the week at a more typical spread of 3
FLUID MILK: Handling of milk and milk components were becoming
more unsettled as the week progressed into the weekend. The
disruptions occurring early in the holiday week remain in full force
ahead of the second holiday. Fluid needs are highly unsettled with
schools and colleges on break this week with many still off the
following week. Smaller manufacturing plants are taking extra down
days and scaled back on milk ordering around the holidays. While
larger manufacturing plants are running on extended schedules at this
time, the trade sentiment ranges from expecting no issues handling the
milk supply in the West to a more complicated outlook of shipments and
juggling in the East. The news along that front is that overall milk
production trends have been lower than year ago levels in many Western
states. The New Year's holiday is typically a poor milk event for
retail and food service; better for eggnog and other cream based items
such as cream cheese, sour cream, whipped cream, dips, and similars.
However, the vast majority of those items are produced and placed.
The current cream markets are sloppy with cream being shipped far and
wide at reduced multiples and pricing levels to find a processing
home. Milk production patterns were stressed by winter storms and
aftermaths in the Midwest and Northeast, and milk processing has been
challenging. Milk plants in the Northeast are being run hard to
process milk supplies and processors are utilizing all plants and
tankers to maximize storage. Discounted milk offerings were common
across the Midwest with milk being priced down to $7 below class to
stimulate buyer interest. Production in the Northwest is mostly
steady, yet levels are below a year ago in the Southwest.
DRY PRODUCTS: The dry dairy product markets are mainly
unchanged in a light test over the last full week of 2012. The
holidays have dulled buyers' interests and there are no advantages to
being an active market participant. Market participants are aware of
the implications of the expiration of the current Farm Bill and the
news about the Fiscal Cliff negotiations in Washington, D.C. While
official details are elusive, the speculation and conjecture about
what could happen are not impacting current week market pricing. Only
minor price changes were noted on the nonfat dry milk market with the
holiday bringing increased drying schedules. Dry buttermilk prices
are unchanged with very light demand. Dry whey prices are steady to
lower with more pricing pressure being noted. Additional whey
offerings are showing up on the market. Lactose and WCP 34% market
pricing are unchanged and untested in light trading.
ORGANIC DAIRY MARKET NEWS (DMN): Organic fat-reduced milk sales for
October 2012 totaled 144 million pounds. Compared to the previous month,
sales increased 15 million pounds or 11.6%. Compared to the same month the
previous year, sales increased 8 million pounds or 5.9%. Cumulative organic
fat reduced sales, January through October 2012, total 1,338 million pounds,
up 34 million pounds compared to the same period a year ago. The national
weighted average advertised price of organic milk half gallons, $3.44, is 39
cents lower than two weeks ago. The price range is $2.49 to $4.99, declined
50 cents on the bottom of the price range and was unchanged on the top.
This period, the concentration of advertised organic half gallon brands was
more heavily weighted toward store brands than national brands. Store brands
had the lowest and highest prices in the price range. The weighted average
advertised price for national brands is $3.92 and for store brands, $3.25.
The national weighted average advertised price for organic butter is $4.01,
down from $4.13 two weeks ago. Prices ranged from $3.49 to $4.79. The
lowest price for organic butter, $3.49, is 50 cents below the highest price
for conventional butter this period.
RETAIL DAIRY MARKET NEWS (DMN): Holiday themes continued this
reporting period with dairy ads geared towards snacking, baking,
cooking, and having desserts for holiday meals. Egg nog transcends
the holiday season, with national ad numbers 55% higher this period,
averaging $3.39 for a half gallon and $2.65 for a quart of
conventional product, up 7 cents but down 3 cents, respectively.
The national butter price was $2.75, down 9 cents from 2 weeks
ago as features grew 25%. Cheese ad features were higher, with
pricing at $2.32 for 8 oz. shreds, the highest featured cheese item, a
3 cent increase over two weeks ago. Cheese in 8 oz. blocks averaged
$2.29, down 24 cents. Cream cheese average prices were up 2 cents to
$1.49. Regular yogurt ad prices in 4-6 oz. packs increased 11 cent
to $0.54; while Greek yogurt increased 1 cent to $1.00. Sour cream
ad numbers increased 45% and the price was steady at $1.54 per pint.
Ice cream in 48-64oz containers averaged $3.15, up 7 cents with the
top ad category at 18,709 store ads.
The national weighted average advertised conventional milk price
for half gallons this period, $2.95, increased 19 cents from two
weeks. The Organic half gallon price averaged $3.44, down 39 cents
from two weeks ago. The resulting organic-conventional half-gallon
spread is $0.49, the lowest spread since this report was started in
COLD STORAGE (NASS): On November 30, U.S. cold storage
holdings of butter totaled 127.1 million pounds, down 12% from
October, but 36% more than November 2011. Natural American cheese
holdings total 581.2 million pounds, 0.2% less than October and 2%
less than November 2011. Total cheese stocks were 941.8 million
pounds, 1% less than last month and 4% less than November 2011.
1200CT Butch.Speth@ams.usda.gov 608.278.4152
National Dairy Market At A Glance