MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
February 1, 2013 MADISON, WI (REPORT 5)
CME GROUP CASH MARKETS (2/01):
BUTTER: Grade AA closed at $1.5550. The weekly average for Grade AA
is $ 1.5350(+.0300).
CHEESE: Barrels closed at $ 1.5425 and 40# blocks at $ 1.6450. The
weekly average for barrels is $ 1.5415 (-.0448) and blocks, $ 1.6450
BUTTER HIGHLIGHTS: Butter prices on the CME Grade AA market this
week moved up 5 cents to close Friday at $1.5550. Cream remains
plentiful and available at discounts to butter churns in the West and
Midwest. Spot cream loads from the East and the West are moving to a
few Central Class II plants as well as butter making operations.
Northeast cream supplies going to churns remain heavy, with most
churns in the region operating at near capacity. Manufacturers and
some buyers are building butter inventories, with increasing stocks
not being considered problematic. Prices for bulk butter range from 3
cents under to 5 cents under the market in the West and from 4-14
cents over the market in the Northeast. The CWT program continued to
assist with export sales for 1.2 million pounds of butter for delivery
through June 2013.
CHEESE HIGHLIGHTS: January has proven to be a tough month for
cheese prices across the nation. Milk volumes to cheese plants remain
strong, especially in the Midwest. Milk production in the Midwest was
up 4.8% from last December compared to a national increase of 1.7%.
Eastern milk supplies are strong with cheese manufacturers working
busier than anticipated schedules. Increased inventories of cheese
are affecting sales as buyers are waiting to find a market bottom to
increase purchases. Prices for barrels at the CME Group in January of
2013 have moved $.1975 lower, with blocks $.1150 lower. Barrel sales
have been active for the month with blocks showing less volatility and
lighter sales. Lower prices have buyers looking to find cheese for
aging programs, but slow to make commitments. Export buyers are in
much the same position, although sales through the CWT program remain
active. This week the program committed to assist with 7.6 million
pounds of cheese sales. Trading at the CME Group for barrels closed
the week at $1.5425, down $.0300 from last Friday. Blocks closed at
$1.6450, unchanged from last week's close.
FLUID MILK: The January 11 cow slaughter total of 72.5 million
head is the highest since 1997. Contacts continue to report flat milk
production in California. Most do not expect much change through the
winter because of the ongoing financial stress at the producer level.
The milk flow in New Mexico is generally steady with the eastern part
of the state experiencing more stress from feed prices than the west.
It is also indicated that fat and protein levels are very good and
have been that way all fall and winter. Milk receipts in the Pacific
Northwest are at expected levels. Weather conditions are reported to
be favorable in Utah and Idaho for milk production. Manufacturing
capacity in the region is adequate to handle current supplies of milk.
Central farm milk intakes continue to outpace expectations in the
Central region. In some places, milk intakes have outstripped
capacity at local processing facilities. A few spot milk loads
cleared into Class III operations at $1.50 - $3.00 under Class, but
interest is very light. Market participants note flat to slightly
lower interest in bottled milk at the beginning of this week. Class I
demand has increased in the Mid-Atlantic and Northeast regions as a
number of storm fronts have prompted increased fluid sales.
Manufacturing milk supplies have marginally declined as a result of
the increase in fluid milk demand. Milk production in the Southeast
region has improved with most of the increases being noted in Georgia
and the Gulf Coast states.
DRY PRODUCTS: Price trends for Central and East nonfat dry milk
were mixed this week in an unsettled market. Prices for low heat
nonfat dry milk moved higher on the full range, but held steady on the
mostly range. The high heat price range expanded as the low end of
the range moved lower and the high end of the range moved higher.
Central market participants report the price differentials that
usually delineate regional manufacturers' spot nonfat dry milk prices
have largely disappeared. Production of nonfat dry milk in the East
declined in some areas, but overall production continues to add to
supplies. Western low/medium heat NDM prices are mixed this week with
the average of the price range increasing while the average of the
mostly price declined. Powder production remains heavy and stocks are
heavier than desired at production plants and building. A weaker tone
continues to chip away at the top of the Central and East dry
buttermilk market. With cream supplies flowing into the Central
region from the East and West, and a few ice cream plants on temporary
hiatus, churns in the region are filled. Western buttermilk powder
range prices narrowed with the bottom increasing and the top
declining. The average of the mostly price series declined. Sales
activity remains light and production is heavier than anticipated.
Dry whole milk prices stepped lower this week as buyers factor in
recent adjustments in nonfat and butterfat solids market values and
inventories. Northeast dry whey prices moved marginally lower this
week as sales based on various price indices decreased the upper end
of the range. Most dry whey inventories are expanding. Conditions in
the Central dry whey market remain lethargic, and prices are unchanged
to slightly lower on the top of the range and bottom of the mostly.
Western dry whey prices are mostly steady to lower. The average
prices for both the range and mostly series are lower this week. No
changes are noted on the whey protein concentrate 34% mostly price
series this week. Spot load availability from some manufacturers is
steady, with pricing ranging from market minus to market plus
depending on inventories and WPC 34% quality characteristics. Another
decrease in pricing on the lactose range series registered this week,
with F.O.B. sales clearing at $.047. This price level last appeared
at the bottom of the Central and West range series in September of
2011. Prices are unchanged for both casein types. The market tone is
steady to firm.
INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN EUROPE OVERVIEW:
Milk production trends in Western Europe are steady with recent weeks
with limited events occurring that are affecting output to any great
extent. Aggregate seasonal output for the EU countries is below year
ago levels. Weather conditions in Germany have been variable, but
only limited effects on milk production and collections. Output is
generally stable to slightly lower. Ireland and England remain behind
year ago levels. Cost of production factors continue to be a limiting
influence for milk growth. Milk prices have trended higher. Euro
valuation increases are increasing pricing in the world market and
limiting sales. World buyers are finding pricing of EU sourced dairy
products more expensive and more challenging to work into budgets.
While butter and WMP prices remain at a competitive disadvantage to
export, SMP and whey are still moving. Current returns are favorable
for cheese/whey derivatives production. Cheese demand is good.
EASTERN EUROPE OVERVIEW: Milk growth has slowed in Poland, but remains
above year ago marks. Dairy product output is steady to lower across
countries. Traders and handlers are looking for value offerings and
reaching to areas with product availability. OCEANIA OVERVIEW: NEW
ZEALAND milk production for the month of December was about 8% higher
than a year earlier, with the season to date trend at 7% higher. The
fantastic run of weather for NZ continues and output continues in line
with forecasts. The expectations are for contraction at the end of
shoulder season months and for the total season projections to be
around 3-4% higher than the previous season. Processing plants are
running on planned schedules and making products for orders on the
books. AUSTRALIAN milk output in December was tracking 2% lower, a
level surprising to the industry. Additional adjustments are expected
to pull the seasonal growth rate closer to 1% above the prior season.
Recent weather conditions have been hot in some areas, yet rainy with
floods in others. The direct impact on the milking herd has been
seemingly minimal to the current point, yet the overall effects are
responsible for the decline in the milk flow. Some flooding in
Queensland has disrupted milk collections into the processing plants.
Dairy product prices in the region are mostly steady with some slight
adjustments occurring. Supplies are generally in good balance to
service current ordering and sales on the books. Butter orders are
moving well. Skim milk powder pricing is slightly lower. Competitive
pricing from other world suppliers is noted. Whole milk powder market
trends are slightly firmer with demand in play from Asia. Cheese
market pricing and trends are steady.
DECEMBER AGRICULTURAL PRICES (NASS): The All Milk price received
by farmers was $20.00 in January, down $0.90 from December 2012 and up
$1.00 from January 2012. The Milk Cows price was $1,370 in January,
down $90 from January 2012. Alfalfa hay price was $217.00 in January,
up $24.00 from January 2012. Corn price was $6.98 in January, up
$0.91 from January 2012. Soybean price was $14.10 in January, up $2.20
from January 2012. The milk-feed price ratio was 1.58 in January, down
0.14 from January 2012. The index of prices received by farmers for
dairy products decreased 7 points during the month of January 2013 to
153. Compared with January 2012, the index was up 8 points (5.5
percent). The index of prices paid by farmers for commodities and
services, interest, taxes, and wage rates in January 2013 increased 3
points to 221. Compared with January 2012, the index was up 11 points
CONSUMER PRICE INDEX (BLS): The December CPI for all food is
235.4, up 1.8% from December 2011. The dairy products index is 219.4,
up 0.5% from a year ago. The following are December-to-December
changes for selected products: fresh whole milk is +2.9%; cheese,
+0.1%; and butter, -2.6%.
COMMERCIAL DISAPPEARANCE (ERS, AMS): Commercial disappearance of
dairy products during the first eleven months of 2012 totals 185.8
billion pounds, 2.1% above the same period of 2011. Comparing
disappearance levels with year earlier levels: butter is even;
American cheese, +2.2%; Other cheese, +1.9%; Nonfat Dry Milk, +21.6%;
Fluid Milk Products, -1.7%.
JANUARY FMMO CLASS AND COMPONENT PRICES (DAIRY PROGRAMS): The
following are the January 2013 prices under the Federal Milk Order
pricing system and the changes from the previous month: Class II
$18.19 (-$0.11), Class III $18.14 (-$0.52), and Class IV $17.63(-
$0.20). Product price averages used in computing Class prices are:
butter $1.5066, NDM $1.5601, cheese $1.7485, and dry whey $0.6503.
The Class II butterfat price is $1.6238 and the Class III/IV butterfat
price is $1.6168. Further information may be found at:
FEBRUARY ANNOUNCED COOPERATIVE CLASS I PRICES (FMMO): For
February 2013, the all-city average announced cooperative Class I
price was $23.28, $2.43 higher than the Federal milk order (FMO) Class
I price average for these cities. The February 2013 Cooperative Class
I price was $0.79 lower than the January 2013 price. The February
2013 Federal order Class I price was $0.76 lower than the January 2013
price. On an individual city basis, the difference between the
Federal order and announced cooperative Class I price ranged from
$0.52 in Phoenix, AZ, to $4.21 in Miami, FL. For February 2012, the
all-city average announced cooperative Class I price was $22.12, $2.47
higher than the Federal order Class I price average for these cities.
Note: For most cities, the Announced Cooperative Class I Price now
includes premiums paid for milk produced without rBST.
NOVEMBER OVER-ORDER CHARGES ON PRODUCER MILK (FMMO): For
November 2012, the all reporting areas combined average over-order
charge on producer milk used in Class I was $2.12, the same as the
October 2012 average. Ninety percent of the producer milk used in
Class I carried an over-order charge. On an individual order basis,
Class I over-order charges ranged from $0.81 in the Pacific Northwest
to $3.01 in the Florida Order. For producer milk used in Class II, the
all reporting areas combined average over-order charge was $1.20, down
$0.08 from the October 2012 average. Eighty percent of the producer
milk used in Class II carried an over-order charge.
SPECIALS THIS ISSUE
INTERNATIONAL DAIRY MARKET NEWS (PAGES 8 - 8B)
DAIRY FUTURES (PAGE 9)
JANUARY MONTHLY AVERAGES AND SUMMARY (PAGES 10-12)
CONSUMER PRICE INDEX & COMMERCIL DISAPPEARANCE (PAGE 13)
JANUARY FMMO CLASS AND COMPONENT PRICES (PAGE 14)
JANUARY AGRICULTURAL PRICES (PAGE 15)
NOVEMBER OVER-ORDER CHARGES ON PRODUCER MILK (PAGE 16)
FEBRUARY ANNOUNCED COOPERATIVE CLASS I PRICES (PAGE 17)
GRAPHS (PAGES G1 - G2)
National Dairy Market At A Glance