MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
January 25, 2013 MADISON, WI (REPORT 4)
CME GROUP CASH MARKETS (1/25):
BUTTER: Grade AA closed at $1.5050. The weekly average for Grade AA
is $1.5050 (+0.0165).
CHEESE: Barrels closed at $1.5725 and 40# blocks at $1.6450. The
weekly average for barrels is $1.5863 (-.0732) and blocks, $1.6525
BUTTER HIGHLIGHTS: Prices on the Grade AA butter markets were
steady throughout the week, holding at $1.5050. Trading activity on
the exchange totaled 4 carloads for the week. Butter manufacturers
indicate cream is still ample and multiples are still lower than what
is needed to sell spot cream above flat market. Internally generated
cream as well as cream coming from Class II operations is moving
through the churns and into bulk butter inventories. Central region
churning operations are especially active as spot loads from the East
and the West are also clearing through the Midwest. NASS's Cold
Storage report shows end of the year manufacturers' butter inventories
stood at 152.9 million pounds, which is 20% higher than one month ago,
and 43% higher than at the end of 2012. Retail demand is light, and
retailers trimmed butter advertisements by almost 17% compared to two
CHEESE HIGHLIGHTS: Cheese prices continued to move lower for the
third week in a row. Increased milk supplies in the Midwest and East
have pushed cheese plants to raise production schedules. The December
Cold Storage report showed that cheese in storage as of December 31,
was nearly equal to a year ago, but 5% higher than November of 2012.
Buyers are using the added inventory to justify lower bids. Prices
remain above year ago levels for this time of year. The increased
supplies and lower prices are attracting attention from export buyers.
The CWT program was active this week with assistance for 3.8 million
pounds of cheese. Cheese featuring for retail sales increased this
week according to the National Dairy Retail Report. Prices for 8 oz.
shred and block packages were lower amidst increased advertising.
Spot cheese prices at the CME Group closed lower this week on moderate
trading. Barrels on Friday settled at $1.5725, down $.0650 from last
Friday. Blocks closed the week at $1.6450, down $.0425 from last
FLUID MILK: Farm milk production continues along seasonal trends
in most areas, with processors noting fluid demand is mostly level
except for intermittent small spikes as customers shop before snow
storms. Cream is readily available across the country. Churning is
active. Spot cream loads from the West and East are converging on the
Central region to find additional processing room. A few
manufacturers note even intermittent churns are following strong
production schedules. Dairy farmers are watching milk futures and
noting the trend toward lower prices. The cost of feed inputs
continues to nip at any profit margins for dairy operators using
purchased feed, and the prospect of lower milk prices may push dairy
farmers to reevaluate herd sizes and other possible changes in
DRY PRODUCTS: A weaker market tone prevails over many of the
dairy dry commodity markets. Active production of nonfat dry milk,
manufacturers' building NDM inventories and light buyer demand has put
some pressure on NDM prices. Buying patterns are meeting just-in-time
needs. End users are monitoring the market and waiting for the next
volume buying opportunity. The top end of each Dairy Market News dry
buttermilk price series retreated this week. These price series are
also under pressure from active production and seasonally light buyer
interest. The lactose mostly series held steady, but the bottom of
the range fell 9 cents in response to additional F.O.B. spot loads
coming to the market. Manufacturers note, though, that some
established buyers are moving up the delivery dates of February and
March loads and additional interest from Asia and South America may
lend some support to the market in the near term. Whey protein
concentrate 34% prices are unchanged to lower. This market also shows
the pressure of higher than anticipated availability of manufacturers'
spot loads. Dry whey prices in the Central dropped fractionally on
the mostly price series while Western dry whey prices sheared 2 cents
and one-half cent off the bottom and top of the mostly series,
respectively. Manufacturers' spot loads are available, as are resale
dry whey loads at competitive prices. Manufacturers are finding some
outlets for dry whey through the export markets. Pricing pressure
exists in that market as well, and manufacturers are committing to
prices that moderate inventories as needed.
ORGANIC DAIRY MARKET OVERVIEW (DMN): AMS reports Total Organic
Milk Products sales for November 2012, 191 million pounds, were up
9.0% from November 2011. Organic Whole Milk sales for November 2012,
49 million pounds, were up 16.0% compared with November 2011. Organic
Fat-Reduced Milk sales for November 2012, 142 million pounds, were up
6.8% compared with November 2011. This contrasts with a 1.7% November
2012 decline for Total Fluid Milk Products Adjusted (which includes
organic and non-organic) compared with one year ago. Organic dairy
advertising volume strengthened to a level not reached since mid-
September. Organic milk ads are the greatest factor in overall ad
numbers this period, supplemented by higher organic butter ad numbers
than during the last several months. Organic milk ads included ads
for organic flavored milk, a relatively infrequent occurrence. Some
organic butter ads continued to offer prices below the highest prices
of advertised conventional butter. The weighted average advertised
price of organic butter is $3.99, down from $4.07 two weeks ago, with
the lowest advertised price being $3.79. Organic cheese in 8 ounce
blocks and 8 ounce shredded had weighted average advertised prices
only a few cents higher than for conventional cheese counterparts.
The current national organic half gallon milk weighted average
advertised price of $3.57 compared with the weighted average
advertised price for non-organic half gallons, $2.01, yields an
organic-conventional half-gallon milk advertised price spread of
$1.56, compared with $0.99 two weeks ago and $0.49 four weeks ago.
The 2012 average spread was $1.24. The majority of organic yogurt
ads, slightly over 78%, are for 32 ounce organic yogurt with the
balance for 4-6 ounce organic Greek yogurt. Ads for organic yogurt in
32 ounce containers range in price from $2.99 to $3.29, resulting in a
national weighted average price of $3.03. Ads for Greek Yogurt in 4-6
ounce containers range from $1.00 to $1.50 in price, with a national
weighted average advertised price of $1.34.
RETAIL DAIRY MARKET NEWS (DMN): Yogurt ad numbers once again
outpaced all other ads this period to be the largest product category,
with 29% of all conventional dairy ads. Nevertheless, total yogurt ad
numbers are down 20.2% for the period, after increasing 110.7%, two
weeks ago. Cheese ads are the second greatest category, 27% of ads,
with ad numbers increasing 7.8%. The largest increase in ads was sour
cream, up 36.7%, with 7% of all ads. Ice cream remains in the top 5
during this winter cold spell, with 13% of ads, down just over 14%.
Milk rounds out the top 5 categories again with 7% of ads, up 16.1%.
The most advertised product within any category, 4-6 oz. Greek yogurt,
increased 2 cents to $1.01, while regular yogurt ad prices for 4-6 oz.
packs increased by 1 cent to $0.50. Cheese pricing at $2.44 for 8
oz. shreds, the most featured cheese item, was a 3 cent decrease over
two weeks ago. Cheese in 8 oz. blocks averaged $2.40, down 9 cents.
Ice cream in 48-64oz containers averaged $3.02, down 4 cents. The
national 1 pound butter price decreased 30 cents from 2 weeks ago to
$2.63. The national weighted average advertised conventional milk
price for half gallons this period, $2.01, decreased 29 cents from two
weeks ago, following a 65 cents decrease two weeks before
that. Organic half gallon prices averaged $3.57, up 28 cents from
two weeks ago, following a 15 cent decline two weeks ago. The
resulting organic-conventional half-gallon price spread is $1.56, up
from $0.99 two weeks ago. The 2012 average price spread was $1.24.
COLD STORAGE (NASS): On December 31, U.S. cold storage holdings
of butter totaled 152.9 million pounds, 20% higher than a month ago
and 43% higher than last year. Natural American cheese holdings total
604.9 million pounds, 4% higher than a month ago, but 1% lower than a
year ago. Total natural cheese stocks totaled 987.9 million pounds,
5% higher than one month ago, and unchanged from one year ago.
DECEMBER MILK PRODUCTION (NASS): Milk production in the 23
major states during December totaled 15.7 billion pounds, up 1.7%
from December 2011. November revised production, at 14.9 billion
pounds, was up 1.3% from November 2011. The November revision
represented an increase of 31 million pounds or 0.2% from last
month's preliminary production estimate. Production per cow in the 23
States averaged 1,848 pounds for December, 30 pounds above December
2011. The number of milk cows on farms in the 23 States was 8.49
million head, 5,000 head more than December 2011, and 16,000 head
more than November 2012. Milk production in the U.S. during the
October-December quarter totaled 49.1 billion pounds, up 0.9 percent
from the October-December quarter last year. The average number of
milk cows in the U.S. during the quarter was 9.20 million head,
17,000 head less than the same period last year.
1200CT Janet.Linder@ams.usda.gov 608.278.4152
National Dairy Market At A Glance
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