MD_DA950
DY, DAIRY
MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
February 15, 2013 MADISON, WI (REPORT 7)
CME GROUP CASH MARKETS (2/15):
BUTTER: Grade AA closed at $1.6050. The weekly average for
Grade AA is $1.5810 (+.0260).
CHEESE: Barrels closed at $1.6300 and 40# blocks at $1.6750.
The weekly average for barrels is $1.6080 (+.0600) and blocks,
$1.6670 (+.0200).
BUTTER HIGHLIGHTS: Butter production is strong across all
regions. Ample cream is reported in the West and Central
regions, with increased cream available in the Northeast
following winter storm Nemo. Most manufacturers in all regions
are building inventories. Bulk butter in the Northeast is
selling 4 to 14 cents over market and up to 7 cents over market
in the Central region. Western bulk butter is often also
selling for a premium price. Wednesday CME AA butter closed up
for the first price movement in two weeks. Exports of butter
and milkfat for January - December 2012 total 107.2 million
pounds, down 24% from the previous year. The butter and milkfat
exports account for 5.8% of butter production in the U.S. for
the year. According to the FAS, quota imports of butter for
January 2013 total 0.8 million pounds, 47.2% more than the same
period in 2012. January imports for 2013 account for 5.3% of
the yearly total quota. Imports of High-Tier butter (above
quota and with a penalty) are 87,640 pounds, significantly
higher than last year's high tier import of 9,932 pounds for
January. Cooperatives Working Together (CWT) has accepted
requests for export assistance to sell 524,700 pounds (238
metric tons) of butter. The product will be delivered February
through July 2013.
CHEESE HIGHLIGHTS: Cheese prices continued to show
strength this week. Last week's higher weekly average price was
reinforced this week with continued price strength. Barrel
prices showed the strongest recovery as the spread between
barrels and blocks returned to a more typical margin. Some
increased sales activity was noted as more buyers returned to
the market to replenish supplies. Some increased milk supplies
are available for manufacturing and cheese plants are taking
some of that volume. Cheese inventories at manufacturers are
described as manageable with export sales helping to balance
sales. The CWT program announced assistance for export sales of
2.3 million pounds this week. Export sales volumes for 2012
from FAS were reported to total 573.3 million pounds, up 16%
from the previous year, a new record volume. Exports accounted
for 5.3% of total US cheese production for the year. At the CME
Group on Friday, barrels closed at $1.6300 up $.0700 from last
weeks close. Blocks closed at $1.6750 up $.0250 from last
Friday's close.
FLUID MILK: Weather conditions for milk production in
CALIFORNIA have been near ideal for a number of weeks. There
are now numerous reports of output pulling ahead of year ago
numbers for the first time in many months. Milk output in
ARIZONA is being called steady. There was some moisture again
over the weekend and temperatures are running about 6-13 degrees
below normal for this season. Not bad conditions, but not all
that conducive to much growth either. New Mexico milk
production is flat. Conditions are a bit cooler again and this
is not helping with milk flow. Cream markets remain on the weak
side, but this week it is due more to some plant production
problems in California versus having to move it out of state
because of no interest. Milk production in the Pacific
Northwest remains on a mostly steady keel. Milk volumes are
following expected amounts with no handling problems reported in
the region. Utah and Idaho temperatures moderated this week and
there is a small increase in production as cows responded to
more favorable weather conditions. Local manufacturers are able
to process current supplies of milk and are seeing some
increased supplies of milk from outside the region. Throughout
the Central region, weather has been conducive to cow comfort
this winter. Drought conditions are easing somewhat due to
snowfall and rain received in the last two weeks. Some plant
operators indicate their intake volumes started a slow decline
during the last 1 - 2 weeks. Other processors note their
intakes continue growing on a weekly basis. Milk haulers are
reporting more milk per load is arriving at processing plants
than in January. Cream supplies remain heavy in the East, due
to volumes from Class I plants and yogurt manufacturers. A
major winter storm hit the Northeast region, resulting in many
trucks being unable to make it to farms, which caused some milk
to be dumped. Manufacturing milk supplies marginally increased
in the Mid-Atlantic region as milk was diverted from New England
and the Northeast. Milk production in Florida continues to
increase, but remains below year ago levels. Milk supplies are
nearly in balance with demand in the Southeast region with only
a few loads being shipped to auxiliary manufacturing facilities.
Milk production continues to show marginal increases on a week
to week basis. In all regions there are also more indications
that ice cream plants are gearing up for the spring/summer
season and buying more cream.
DRY PRODUCTS: Nonfat dry milk prices in the Central and
Eastern regions decreased on the range, and are unchanged to
lower on the mostly price series. Average prices for both the
range and mostly series moved lower for Western low/medium heat
powder. Buyers see no reason to make additional spot purchases
while price averages continue to decline. Sellers noted that
prices are quoted at the same level for both the Central and
Western regions, not a normal occurrence. Central and Eastern
dry buttermilk prices continued on their downward trend and
declined for the fifth consecutive week with spot sales lowering
the low end of the range and sales based on various price
indices lowering the upper end of the range. Domestic spot
load interest is light. Trading was very light for Western
buttermilk powder, where range prices were steady while the
mostly series average was lower. Light spot trading is keeping
dry whole milk prices unchanged to slightly lower on the top of
the range for the week. The overall tone of dry whey markets is
lower. Central and Western average of the mostly dry whey
prices declined, as did the West and Northwest range. Dry whey
production is active in the Northeast and Central regions, and
steady in the West. Central and West whey protein concentrate
34% prices are unchanged on the range, and fractionally lower on
the bottom of the mostly series this week. The dual nature of
the lactose market continues this week. Both the range and
mostly series are unchanged. Prices on spot loads of unground
lactose are trending toward the low end the range. Higher mesh
size spot loads are reportedly maintaining their market plus
values and are less readily available. Pricing for both casein
types is unchanged. The market undertone remains on the firm
side.
INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN EUROPE
OVERVIEW: Milk production across Western Europe is tending to
follow recent patterns with limited weather or related stress
across the region. Relatively high feed costs remain a concern
for dairy producers attempting to grow output through
supplemental feeding. Milk is showing incremental, seasonal
growth. Total, overall volumes are projected to be below year
ago levels in January and the trends are also reported to
continue into February. German output is trending slightly
higher than a year ago. Processors are finding adequate milk
supplies to make products of first choice, but some milk
declines resulting from early season conditions are now not
allowing all product spectrums to be manufactured. An example
would be casein output being below expected volumes in several
countries. Overall, milk prices have been fairly stable. The
Euro weakened during the past weeks, but has begun to strengthen
against other currencies. The effects are having some impacts
on restricting exports. High prices in relation to other
exporting countries are also affecting the ability of the trade
to move dairy products into international channels. There
remains a good pull for internal demand of fresh and internal
dairy products. Butter pricing is steady to slightly lower.
The PSA butter program year goes through the end of February and
the butter in storage will need to be out by then. The butter
offerings have been readily absorbed into the market. Whole
milk powder pricing remains high in relation to world markets
and exports are minimal. The skim milk market pricing is more
in line with competition and garnering internal and external
interest. The dry whey market prices are tending lower,
reflecting slower demand and competitive pricing in other
exporting countries. EASTERN EUROPE OVERVIEW: Milk production
trends in Eastern Europe are steady to slightly lower. Milk
output in Poland is being tempered with considerations being
given to quota issues. The late in the year declines are
pulling down the yearly and seasonal output forecast. Dairy
product offerings are tending to be along expected volumes with
pricing levels holding mostly steady. OCEANIA OVERVIEW: NEW
ZEALAND milk output trends continue to show milk volumes
dropping and current trends pulling season to date total volumes
lower. Milk is beginning to move below year ago marks.
Expectations are that this will continue throughout the
remainder of the season. Recent dry conditions in the North
Island milk producing areas are impacting the milk flow there
with some farmers drying off cows early. The full impact of the
detection of DCD in NZ dairy products is still being assessed,
but there have been few concerns beyond the initial story.
AUSTRALIAN milk production is trending lower with the latest
stats for December being down 1.3% versus a year earlier. The
current milk flows are noted to be running at below year ago
levels at this time with the total seasonal growth rate versus a
year ago shrinking. The weather conditions of rains and
flooding in the Northern Queensland region are severely
impacting the dairy industry in that area, which is mainly
servicing the fluid milk needs for the locale. Cattle,
infrastructure and collection have all been affected. Overall,
the effects on the total milk market are limited, yet impactful
for those in the areas. Elsewhere, hotter and dryer weather
conditions in the major milk producing regions of Victoria and
New South Wales are impacting milk yields and output to a
limited extent. Dairy product pricing trends are steady to
slightly firm. With declining milk supplies at or below
seasonal trends, processing schedules are being aligned to make
products of greatest needs. g/Dt: At the February 5th g/DT
session #85, average prices for most products traded and
contracting periods were mostly steady to firm. Average prices
across all contracting periods and individual products ranged
from 0.1% lower to 7.2% higher. The product price averages (per
MT) and percent changes from the previous average are:
anhydrous milk fat, $3,500, +7.2%; buttermilk powder, $3,530,
+3.7%; cheddar cheese, $3,525, -0.1%; lactose, $1,800, n.a.;
milk protein concentrate, $6,070, +1.2%; rennet casein, $8,766,
+3.3%; skim milk powder, $3,554, +0.5%; and whole milk powder,
$3,468, +5.4%. The next event, #86, will be on February 19.
Butter will trade for the first time.
FEBRUARY MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The milk
production forecast for 2013 is raised. Milk cow numbers are
raised because USDA's Cattle report indicated that the number of
cows on January 1 was about unchanged from 2012. Milk per cow
forecasts are raised because last quarter-2012 estimates were
higher than expected and lower forecast feed costs support
higher milk yields in 2013. Fat-basis trade estimates for 2013
are unchanged. The skim-solids export estimate for 2013 is
raised largely on expectations of stronger nonfat dry milk (NDM)
shipments, but the import forecast is unchanged. Milk
production estimates for 2012 are raised, reflecting end-of-year
production data. Dairy trade estimates for 2012 reflect the
pace of trade through November. Cheese prices are unchanged
from last month, but the price range is narrowed. NDM and whey
prices are raised reflecting stronger demand, but the butter
price is lowered. Despite a higher whey price, the forecast
Class III price is unchanged although the range is tightened.
Lower butter prices are more than offset by higher NDM prices
resulting in a slightly higher forecast Class IV price. The
range of all milk price for 2013 is narrowed to $18.90 to
$19.70.
FEDERAL MILK ORDER MARKETING AND UTILIZATION 2012 ANNUAL
SUMMARY (DAIRY PROGRAMS): During 2012, more than 122.3 billion
pounds of milk were received from producers. This total annual
volume of milk is 3.8% lower than the 2011 total annual volume.
There were volumes of milk not pooled due to intraorder
disadvantageous price relationships in both years. More than
43.4 billion pounds of producer milk were used in Class I
products, 2.3% lower than the previous year. The all-market
average Class utilization percentages were: Class I = 35%, Class
II = 14%, Class III = 39% and Class IV = 12%. The 2012 weighted
average statistical uniform price was $18.05, $1.82 lower than
the 2011 weighted average statistical uniform price.
NOVEMBER MAILBOX MILK PRICES FOR SELECTED REPORTING AREAS
IN FEDERAL MILK ORDERS AND CALIFORNIA (AMS & CDFA): In November
2012, mailbox milk prices for selected reporting areas in
Federal milk orders averaged $22.19, up $0.64 from the October
2012 average, and up $1.60 from the November 2011 average. The
component tests of producer milk in November 2012 were:
butterfat, 3.85%; protein, 3.19%; and other solids, 5.72%. On
an individual reporting area basis, mailbox prices increased in
all Federal milk order reporting areas except Minnesota when
compared to the previous month. Mailbox prices in November 2012
ranged from $24.04 in Florida to $20.36 in New Mexico.
SPECIALS THIS ISSUE
INTERNATIONAL DAIRY MARKET NEWS (PAGES 8 - 8B)
DAIRY FUTURES (PAGE 9)
JANUARY MILK SUPPLY AND DEMAND ESTIMATES (PAGES 10 - 11)
2012 FEDERAL MILK ORDER MARKETING SUMMARY (PAGE 12)
NOVEMBER MAILBOX MILK PRICES (PAGE 13)
GRAPHS (PAGES G1 - G2)
1200CT eric.graf@ams.usda.gov
National Dairy Market At A Glance
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