MD_DA950
DY, DAIRY
MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
January 11, 2013 MADISON, WI (REPORT 2)
CME GROUP CASH MARKETS (1/11):
BUTTER: Grade AA closed at $1.4550. The weekly average for Grade AA
is $1.4575 (-.0394).
CHEESE: Barrels closed at $1.6725 and 40# blocks at $1.7200. The
weekly average for barrels is $1.6855 (-.0370) and blocks, $1.7280
(-.0320).
BUTTER HIGHLIGHTS: Butter churning activity is characterized as
"active", "increased" or "above demand" in regions spanning the
country this week. Cream offerings remain heavy and CME prices over
the week are lower. Nevertheless, bulk butter through the week has
ranged from 4-7 cents over market in the Northeast, 3-5 over in the
Central region, and 3-5 cents under in the West. Butter is going into
inventory - sometimes manufacturer's inventory and sometimes into
buyer's inventory. Export interest has also improved, prompting some
butter makers to focus on 82% butter production. According to the
NASS Dairy Products report, November butter production for the U.S.
totals 143.7 million pounds, down 6.0% or 9.1 million pounds from
November of last year. Cumulative output through November for the
U.S. is 1,684.3 million pounds, up 2.5% or 40.4 million pounds from
the same period in 2011. The National Dairy Retail Report found that
butter ads nationally declined in number 70.7% from two weeks ago but
the weighted average advertised price increased 6.5% to $2.93.
CHEESE HIGHLIGHTS: Spot cheese prices were weaker for the first
full week of trading in 2013. Increased production over the holidays
resulted in additional offers to the spot market. Barrel supplies are
said to be long and buyers were willing to wait for lower prices to
make additional purchases. Some of the additional block supplies were
directed to the export market. The CWT program initiated their first
assistance of the year with 1.4 million pounds of cheese accepted from
10 different sources. Some milk continues to be available for cheese
production in the Midwest at below Class pricing. The additional
production is also finding a home in increased interest from aging
programs. The November Dairy Products report found total cheese
production for the month at 911.6 million pounds, up 1.8% from the
previous year. Cumulative production for the first eleven months was
up 2.5% compared to 2011 production. Cheese featuring in retail print
ads was reduced after the holidays according to the National Dairy
Retail Report. Prices for the most heavily advertised category of 8
oz. shredded cheese packages were slightly higher in lighter
featuring. Spot cheese prices at the CME Group this week were lower
with buyers taking advantage of lower prices when offered. Barrel
cheese closed the week on Friday at $1.6725, down 4.75 cents from last
week. Blocks closed at $1.7200, down 4 cents from last Friday's
close.
FLUID MILK: Milk production across the nation ranges from steady
to increasing with the exception of Florida, which has experienced
higher temperatures and humidity, lowering cow comfort levels and
production. Manufacturing milk supplies are heaviest in the
Northeast, but more manageable compared to the holiday period.
Processing plants in the rest of the country are working on reduced
schedules as yearend milk supplies are worked through and other fluid
handlers and smaller processors have resumed normal intakes. Cream
supplies range from ample to heavy with markets unsettled as the
lingering effects of the holiday period continue in some areas. Cream
demand is slow to build with excess cream keeping churns operating on
increased schedules.
DRY PRODUCTS: Nonfat dry milk prices trended lower in the East
and Central regions with Western prices unchanged to lower. Post-
holiday production remains very active in the Eastern and Central
regions, but slowing down in the West. Stocks are moderate to heavy,
but not considered burdensome. Dry buttermilk prices are unchanged
to lower in an unsettled market. Production remains active in the
East and Central regions as cream volumes going to churns are ample to
heavy. Western production runs are steady to lower. Stock levels are
varied with some producers holding onto heavier than desired volumes.
Dry whey prices are mixed in the East, mostly lower in the Central and
steady to lower in the West. Increased production over the holiday
period and slow end of year trading has increased available supplies.
The Central region saw blocks of loads clearing at markedly lower
prices compared to last week, while Western export loads were trading
at the lower end of the range. Prices for whey protein concentrate
34% are steady. Demand is steady with production unchanged to lower.
Prices for lactose were mixed. Spot load availability increased this
week with prices varying widely and are commensurate with end user
desired quality.
ORGANIC DAIRY MARKET NEWS (DMN): Looking back over the 2012
organic dairy ad survey results, the three categories with the
greatest number of ads were milk, yogurt and butter, in that order.
Organic milk ads dominated, with 60.5% of all organic dairy ads
throughout 2012, followed by yogurt with 24.4% of ads and butter with
11.8% of ads. Within the overall organic milk category for 2012,
65.5% of ads were for half gallons, 26.4% for 8 ounce, and 3.6% for
gallons. Current organic dairy advertising volume is above the 2012
bi-weekly average, below the level two weeks ago, but that aside, is
higher than any survey period since the beginning of October. Organic
milk ads account for 64% of organic dairy ads, followed by organic
yogurt, with 20%, organic butter with 15%, and organic ice cream with
1%. The national weighted average advertised price of organic milk
half gallons, $3.29, is 15 cents lower than two weeks ago. The price
range is $2.59 to $4.99, increased 10 cents on the bottom of the price
range and was unchanged on the top. The current national organic half
gallon milk weighted average advertised price of $3.29 compared with
the weighted average advertised price for non-organic half gallons,
$2.30, yields an organic-conventional half-gallon milk advertised
price spread of $0.99, compared with $0.49 two weeks ago. The 2012
average spread was $1.24. The national weighted average advertised
price of organic milk 8 ounce containers, $0.91, is 9 cents lower than
two weeks ago. While more often than not this product size is
typically advertised at a price of $1.00, lower price ads in the
Northeast moved the national average lower. Organic yogurt ads
appeared for 32 ounce organic yogurt as well as 4-6 ounce Greek
yogurt. There were no ads for 4-6 ounce organic yogurt. Ads for
Greek Yogurt in 4-6 ounce containers ranged from $1.00 to $1.50 in
price, with a national weighted average advertised price of $1.09.
WORLD DAIRY SITUATION (FAS): This past year has been a
rollercoaster ride for dairy markets with international prices
starting at relatively high levels, declining in mid-year, and then
staging a modest comeback. Initially, the anticipation of a surge in
milk production among major exporters fueled by high milk prices
caused dairy product prices to decline sharply. In addition, the
health of the global economy added uncertainty particularly as the EU
economic crisis lingered as a major unresolved question. The price
decline, however, was subsequently arrested as the severity of the
developing drought in the United States became evident and concerns
over available exportable supplies caused prices to post a cautious
recovery. Currently, global dairy markets are in a stable phase with
prices fluctuating within a narrow range but with no discernible
direction as importers and exporters evaluate the future. Milk
production in Oceania is expected to increase by 6 percent in 2012
over 2011 due to the combination of unusually favorable weather and
excellent pasture conditions that prevailed during the season.
However, for 2013, the forecast pegs milk production to grow by less
than 1 percent. In the United States, milk output which is slated to
grow by almost 2 percent in 2012, but is expected to remain virtually
flat in 2013 as high feed prices have taken a toll on the financial
health of dairy farmers. In the EU, milk production is forecast to
grow by less than 1 percent. In sum, it appears that 2012 was an
exceptional year but milk output in 2013 will revert back to a more
normal pace.
OCTOBER MAILBOX MILK PRICES FOR SELECTED REPRORTING AREAS IN
FEDERAL MILK ORDERS AND CALIFORNIA (AMS & CDFA): In October 2012,
mailbox milk prices for selected reporting areas in Federal milk
orders averaged $21.55 per cwt., up $1.86 from the September 2012
corrected average, and up $1.41 from the October 2011 average. The
component tests of producer milk in October 2012 were: butterfat,
3.81%; protein, 3.17%; 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
October 2012 ranged from $23.83 in Florida to $19.39 in New Mexico.
2012 ANNOUNCED COOPERATIVE CLASS I PRICES (DAIRY PROGRAMS): For
2012, the all-city average announced cooperative Class I price was
$22.53 per cwt., $2.45 higher than the Federal milk order Class I
price average for these cities. The 2012 announced cooperative Class
I price was $1.76 lower than the 2011 price while the Federal Milk
Order Class I price was $1.69 lower. The 2012 difference was $0.07
lower than the 2011 difference. Unlike 2011, the 2012 Annual Averages
include the city of Wichita KS. On an individual city basis, the
annual average difference between the Federal order and announced
cooperative Class I price ranged from $0.50 in Phoenix, AZ, to $4.24
in Miami, FL.
1200CT Rick.Whipp@ams.usda.gov 608.278.4158
National Dairy Market At A Glance
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