MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
April 12, 2013 MADISON, WI (REPORT 15)
CME GROUP CASH MARKETS (4/12):
BUTTER: Grade AA closed at $1.7400. The weekly average for
Grade AA is $ 1.7340 (+.0695).
CHEESE: Barrels closed at $ 1.7550 and 40# blocks at $ 1.8375.
The weekly average for barrels is $ 1.7385 (+.0950) and blocks,
$ 1.8090 (+.0935).
BUTTER HIGHLIGHTS: Retail butter demand is good in the
West and the market tone is positive. Some buyers wish to
increase orders but they face a situation of butter stocks being
managed carefully to ensure sufficient product availability
later in the year. Northeast butter domestic demand is better
than expected and export demand remains strong. Central butter
manufacturers report that domestic and international interest
for 80% and 82% butter is steady. Bulk butter prices in the
West range from 3 to 4 cents under market. Central bulk butter
pricing is reportedly carrying premiums of up to 10 cents over
market. In that region, some pending international butter
orders await fulfillment so cream is being kept in house to fill
those contracts despite a recent increase in spot cream
multiples. NASS's Dairy Products report shows nationwide butter
production in February 2013 totaled 171.3 million pounds, an
8.9% decrease from January, but a 1.1% increase from the
unadjusted February 2012 total. According to the Foreign
Agricultural Service, exports of butter and milk fat for
January-February 2013 total 20.0 million pounds, up 34% or 5.0
million pounds from the same period a year ago. The butter and
milk fat exports account for 5.6% of butter production in the
U.S. for the time period.
CHEESE HIGHLIGHTS: Cheese prices moved higher again this
week, continuing an increase that started last week. Spot prices at
the CME Group have been on the rise for most of the sessions since
Easter. Recent reports of tighter than expected worldwide milk
supplies have helped to increase demand for U.S. cheese. The Foreign
Agriculture Service export report for January-February 2013 stated
that cheese exports for the period were up 9% from the same time a
year ago. The higher prices and good demand have cheese plants
increasing production. Many plants are operating at full production
to fill orders. Increasing milk supplies in many parts of the country
are finding a willing home at cheese plants. At the CME Group, prices
for barrels have increased 15.75 cents since March 28. Blocks have
increased 14.5 cents over the same time period.
FLUID MILK: Many Central Region dairy farmers and
manufacturing operations dealt with early spring snow, hail,
wind and rain during the week. Milk pickups were delayed to
some degree in many areas of the northern tier of states when
driving conditions deteriorated on Tuesday and Wednesday. Cream
loads heading east from the Mountain States stalled overnight in
Nebraska because of the shutdown of Interstate 80. Spot milk
movement was limited, although one cheese plant is reportedly
seeking numerous loads per week in the near term to fill cheese
orders. Eastern cream loads are clearing into Central churns.
Milk output continues to move slowly higher in California
towards the seasonal peak. In the northern Sierra region, there
has been only 5.5 inches of precipitation since January 1. The
previous recorded low event was in 1923 when only 8.4 inches
fell. Arizona milk output remains very near peak levels and is
expected to remain there until heat stress takes the top off the
seasonal output. Temperatures are getting into the 90s
occasionally, but only for brief periods and nights remain cool.
Contacts note an average spring developing in New Mexico.
Temperatures are into the 80s and moisture is very short. The
first cutting of alfalfa should start coming off in about two
weeks. That will mean some additional milk supplies as the new
feed hits the dairies. Normal spring weather conditions
continued in the Pacific Northwest this week. Milk production
is building slowly across the region. There were no major
interruptions reported at manufacturing plants and processors
are able to handle current supplies with ease. Idaho and Utah
milk supplies are increasing as they build towards spring flush
production. Processing capacity in the region is sufficient for
current milk supplies. Snow packs in the mountains are reported
at near 80% of normal and are not expected to restrict farm
irrigation supplies. Northeast and Mid-Atlantic region milk
supplies have marginally increased compared to last week. Milk
production continues to increase along the seasonal trend.
Pastures are beginning to green up with 61% rated as fair to
good. Drought conditions continue to worsen in Florida with
many areas 4-8 inches below normal rainfall, since the beginning
of the year. Milk production is past the peak and has shown
some marginal declines as hot weather has lowered cow comfort
levels. Warm weather and green pastures have significantly
increased milk production in the Southeast with current
production at or near the peak of the spring flush. Cream
supplies are readily available with good volumes of standardized
cream coming from Class I plants with additional volumes coming
from yogurt production.
DRY PRODUCTS: Prices for Central region nonfat dry milk
are higher on a firm market. A few producers indicate that
April NDM spot supplies are exhausted. End users indicate
resellers are actively offering NDM loads at prices near the top
of the range. Northeast nonfat dry milk prices moved higher as
spot sales, though fairly light, moved both ends of the price
ranges significantly higher. Market conditions have changed
dramatically over the past few weeks and have brought about the
unusual situation of rising prices in the face of expanding
production schedules with the onset of the spring flush.
Western low/medium heat powder prices moved sharply higher this
week. The turnaround from just a few weeks ago is amazing to
most in the market. They are not doubting that it is happening,
just surprised at the speed of the change in direction. Spot
sales are again leading the market, though higher rather than
lower as was the case three weeks ago. The market is becoming
very untested because of very limited spot activity available
from manufacturers. Central dry buttermilk prices are stepped
higher as the market benefits from tighter supplies and steady
to increasing interest. Churning is active in the region at
several locations. Northeast dry buttermilk prices moved higher
again this week as prices for both spot sales and sales based on
various price indices advanced. Ample cream supplies and good
export demand for butter continue to keep churns very active
and, as a result, dry buttermilk production remains steady.
Prices continue to move sharply higher for Western buttermilk
powder. The market is firm. Offerings from manufacturers are
declining as they make marketing decisions related to holding
any stocks on hand for future sale. Central dry whey prices are
mixed, with basis prices inching lower and F.O.B. spot prices
moving higher. According to several Central market
participants, the time for buyers to enter the market at the
bottom is in the rearview mirror. The market floor is in place.
A few Central dry whey manufacturers confirmed sales into China
and Southeast Asia. Western dry whey prices were marginally
higher this week as the range and the mostly series narrowed.
The overall trend is firming in the whey market with many
participants expressing a belief that the bottom is in for whey
for at least the near future. Northeast dry whey prices on the
upper end of the range increased, while the low end of the range
was unchanged. Export demand and spot market sales have been
very active in recent weeks and have tightened up supplies in
the region. Central and West lactose prices are unchanged to
higher on the top of the mostly as quarterly pricing on market-
based contracts begin this week. Lactose inventories are uneven
from manufacturer to manufacturer. The range and mostly whey
protein concentrate 34% price series widened on a firmer market.
Some buyers are noting the comparative value of WPC 34%, on a
protein basis, when viewed alongside nonfat dry milk and dry
buttermilk. Prices for dry whole milk stepped higher on a firm
market having support from both the nonfat and butterfat
markets. Buyer interest is steady to higher. Prices are
unchanged for both casein types. The start to Q2 saw the
pricing levels adjust higher. The market tone is firm.
INTERNATIONAL DAIRY MARKET NEWS (DMN): EUROPEAN OVERVIEW:
WESTERN OVERVIEW: Milk production levels in Western European
continue to trend below a year ago in the majority of countries.
The biggest factor is the lingering wintry weather conditions
across most of the major milk producing countries. Germany,
Ireland, France, and the United Kingdom are noted to be tracking
lower. The impacts of higher dairy product prices and the
subsequent milk price gains are welcomed by milk producers.
Fresh milk product sales are indicated to be hampered by cold
weather. Prices for skim and whole milk powders are again
higher to sharply higher. The impact of higher prices in other
regions has buyers searching for countries with offerings.
Local buyer interest has also increased as those buyers seek
coverage. Butter prices moved higher with good demand noted for
local buying needs. Current pricing levels are limiting
exports. In March, butter movements into the Private Storage
Assistance (PSA) program totaled 17,000 MT, down from nearly
32,000 MT a year earlier. The current high pricing points and
good demand are major reasons for the downturn in shipments into
the PSA. Dry whey pricing is higher. Buyer interest is good
for the food quality, but met with lighter offering volumes.
Demand is also good for feed quality and those prices are nearly
equal. EASTERN OVERVIEW: Milk production in Eastern Europe
remains at below year ago levels for most countries and has
limited growth for others. Snow and cold conditions are
reported to be impacting the milk flow in Poland. High feed
costs are restricting supplemental feeding. Higher dairy
product prices are being welcomed. Offering of finished dairy
products are most often light.
OCEANIA OVERVIEW: NEW ZEALAND milk production continues to be
impacted by drought conditions on the North Island and overall
dry conditions elsewhere. At the farm level, the growing
conditions for pastures remains poor and cows are being dried
off earlier than desired. Other producers are giving
supplemental feeding, which is increasing costs of production.
Farmers are concerned about cow conditions for the start of the
next milk season. News accounts are noting step-ups in milk
prices. Pasture conditions are dry and the stands stressed.
Rainfalls are needed to replenish water supplies. Some forecast
models are showing rains in the next few weeks. The decline in
milk is creating increased management of accounts on the books
assessed against holdings and future production. Traders and
handlers are being strategic to meet customer requirements.
AUSTRALIAN milk production continues to be impacted by dry
conditions and the effects of hot weather in recent months. The
milk budgets are being forecast lower as the milk season
progresses. The impact on product mix at the end of the season
will be seen, but the sentiment is that the orders on the books
will be serviced. Meeting the local demand is moving more milk
towards those needs. Consumer interest is good and clearing
expected volumes. Milk production is running below year ago
levels as the season winds down. From July - February, the
seasonal totals reported by Dairy Australia are running 1.1%
lower (unadjusted for leap day in 2012) than during the same
timeframe a year earlier. Season through February, unadjusted
figures are: New South Wales, -0.6%; Victoria, -0.6%;
Queensland -5.5%; South Australia -3.6%; Western Australia -
1.5%; and Tasmania -2.0%. Dairy product prices are higher to
sharply higher. The impacts of the gDT auction results are
creating reactions in the marketplace. Higher prices are
creating more tension in the marketplace. Some ingredient
buyers are seeking coverage and willing to pay the prices with
the ability to cost average the impact of the current market
prices against other holdings. Other buyers are out of the
market at the current pricing levels. gDT: At the April 2nd
gDT session #89, average prices for the majority of products
traded and contracting periods were higher and were sharply
higher for skim milk powder. The all contracts price averages
(US$ per MT) and percent changes from the previous average are:
anhydrous milk fat, $4,695 +6.7%; butter, $4,425 -2.7%;
buttermilk powder, $4,595 +0.8%; cheddar cheese, $4,622 +6.6%;
lactose, not traded; milk protein concentrate, not traded;
rennet casein, $9,489 +4.4%; skim milk powder, $5,142 +27.8%;
and whole milk powder, $5,100 +7.0%. The next event, #90, will
be on April 16.
MARCH MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The milk
production forecast for 2013 is reduced on lower milk per cow in
the first quarter. Cow numbers are unchanged from last month.
Fat-basis imports are reduced mostly on lower imports of
anhydrous products. The skim solids import forecast is reduced
largely on lower expected imports of milk protein concentrates.
Export forecasts are unchanged from last month. Fat-basis
ending stocks are forecast higher, but skim-basis stocks are
lowered. With slightly lower forecast 2013 milk production and
improved domestic product demand, price forecasts for cheese,
butter, NDM, and whey are raised. As a result, both Class III
and Class IV price forecasts are higher than last month. The
All Milk price for 2013 is higher at $19.45-$19.95.
*****SPECIALS THIS ISSUE*****
INTERNATIONAL DAIRY MARKET NEWS (PAGES 8-8B)
DAIRY FUTURES (PAGE 9)
APRIL MILK SUPPLY AND DEMAND ESTIMATES (PAGES 10-11)
GRAPHS (PAGE G1)
National Dairy Market At A Glance
- Yogurt nominated as New York’s ‘state snack’
- 6 of California’s Top 10 counties saw 2013 milk output declines
- USDA amends Appalachian, Southeast and Florida federal orders
- Legislation would block EPA from releasing producer information
- USDA: Livestock producers urged to keep good disaster records
- DHM Markets/Marketers: PA IOFC a record high
- “Ag-gag” laws in the news
- Conventional agriculture winning some, losing some in culture war
- DHM Markets/Marketers: Fluid sales, cost of production, Chobani
- Can genomics, OPU and IVF take the industry to the 'next level?'
- Preventing roof collapses from snow on agricultural buildings
- Monsanto opens search for 2014 "Farm Mom of the Year"