MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
June 07, 2013 MADISON, WI (REPORT 23)
CME GROUP CASH MARKETS (6/7):
BUTTER: Grade AA closed at $1.5450. The weekly average for
Grade AA is $1.5410 (-.0003).
CHEESE: Barrels closed at $1.7600 and 40# blocks at $1.7475.
The weekly average for barrels is $1.7250 (+.0137) and blocks,
BUTTER HIGHLIGHTS: Western butter buyers are looking for
discounts for sales above immediate needs. Increased
inventories continue to weigh on the market. Western
manufacturers are looking at export opportunities to move
inventory and some have increased production of 82% butterfat to
fill that need. The Central butter market is steady. Butter
churn operators continue to buy spot cream loads for churning,
as long as multiples are below the mid 1.30's. Butter
production continues at an active pace in the Northeast with
plenty of cream finding its way to the churn. Most Northeast
butter makers remain comfortable with their current inventories.
Prices for bulk butter vary by region. Western prices range
from 3 cents under to 5 cents under the market, Central prices
are flat to +4, and Northeast prices are 4-8 cents over the
market. NASS reports that April butter production for the U.S.
totaled 169.3 million pounds, down 0.3% or 0.5 million pounds
from April of 2012. Cumulative output for the year for the U.S.
through April was 713.2 million pounds, up 2.1% or 14.9 million
pounds from the same period in unadjusted 2012. According to
the Foreign Agricultural Service, exports of butter and milkfat
for January-April 2013 total 43.0 million pounds, up 4% or 1.8
million pounds from the same period a year ago.
CHEESE HIGHLIGHTS: Wholesale cheese prices based off of
the CME Group weekly average were lower for the second week as
both barrels and blocks were weaker. Cheese production is lower
than previous months, but remains above year ago levels. Milk
supplies for manufacturing increased this week as Class I usage
is lower with many schools now closed for the summer. Much of
this milk will go to Class III (cheese) manufacturing. The
increased production will add to already heavy inventories in
storage. Demand is reported to be lackluster with many buyers
hoping to wait for a bottom in prices. Indications of price
increases this week at the CME Group spot sales spurred trading
of blocks with 50 loads sold this week. Barrel sales remained
restrained with 4 loads sold. Exports of cheese for January-
April 2013 total 210.7 million pounds, up 7% from the same
period a year ago. Exports account for 5.7% of total cheese
production in the U.S. At Friday's close at the CME Group,
barrels closed at $1.7600, up .0525 compared to last Friday.
Blocks closed at $1.7475, up .0025 compared to last week's
FLUID MILK: Milk production is steady to increasing in
most regions of the nation. Extreme heat in the Southwest and
California is putting increased stress on those dairy herds.
Humidity and a tropical storm across Florida will likely
accelerate the down trend in milk production. Manufacturing
supplies are increasing nationwide as schools are beginning to
close. Most manufacturers in most areas of the country are
handling the increased volumes without problems, except the
Northeast. The Northeast has incurred extended delays clearing
milk, due to a variety of production interruptions at numerous
plants. The Southeast is also experiencing heavy milk volumes,
necessitating the utilization of nearly all auxiliary
manufacturing plants. Demand for cream is steady in the West
and increasing in the remainder of the country with increased
pulls from ice cream and cream cheese manufacturers.
DRY PRODUCTS: Nonfat dry milk prices were steady to
higher. Demand remains fairly slow as many market participants
are waiting for a better understanding of market conditions
before making future marketing decisions. Most manufacturers
are comfortable with their current inventories. Production is
especially heavy in the Eastern region. Dry buttermilk prices
showed some strength in the West, but were mixed in other parts
of the country. Production is seasonally heavy with some
declines noted in the Central region. Most manufacturers are
comfortable with their current supplies. Dry whey prices firmed
this week across the nation. Production is steady to increasing
in most areas. Domestic demand is steady, but export interest
has improved. WPC 34% prices have firmed with improved buyer
interest. Production is active at most locations. Lactose
prices are unchanged with some manufacturers offering spot loads
to the market.
INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN EUROPE
OVERVIEW: Western European milk production is mostly steady
with some areas being affected by adverse weather conditions.
Flooding and wet conditions are common over some areas of Europe
seeing the most severe issues. Early indications are that the
impact is minimal to the dairy sector. Wet conditions at the
farms in these areas are preventing pasturing of stock and the
cropping. Some transportation issues are noted in the
collection of farm milk and the subsequent delivery of dairy
products. Milk production has likely peaked for the season in
Germany. Output is currently noted higher than year ago volumes
in Germany, Holland and Denmark. Milk volumes are lower than
year ago levels in France, U.K., and Ireland. Dairy product
pricing levels are mostly stable with only slight adjustments
recorded. The stronger Euro factored in some price gains. The
Private Storage Assistance (PSA) butter stocks at the end of May
are over 46,000 MT, compared to nearly 80,000 MT a year ago.
EASTERN OVERVIEW: Eastern European milk production levels are
trending slightly higher as seasonal gains are registered.
Volumes vary across countries. Flooding was also common over
Eastern Europe, most notable in the Czech Republic. Dairy
products are trading along expected volumes with buyers more
active in seeking future needs. Milk production is reported
higher than year ago levels in Poland. OCEANIA OVERVIEW: The
NEW ZEALAND milk output is slowing at levels along seasonal
trends as the calendar enters the winter season. Overall, milk
remains at levels below a year ago. The effects of the March
drought remain a strong influence on the current production
cycle. Despite recent wet conditions, there has been limited
response to milk production. Pasture conditions are expected to
improve with reseeding growth developing. Farmers are seeing
more optimistic news about the next season. Higher payments for
next season's milk are being set by milk buyers/processors. The
payments are a result of the higher market prices for finished
dairy products and the shifting supply and demand balance in
international markets. AUSTRALIAN milk production trends remain
below a year ago levels in most milk producing regions. Milk
price step ups are reported for this production season in
Australia. Additionally, opening milk prices for next season
are being calculated and projected to move higher. Recent
currency devaluations would factor into allowing for increased
milk pricing. Farm economics and the effects of weather
conditions continue to put a damper on current milk production.
Rainfall is helping to rebuild soil moisture and water
reservoirs that will benefit next season's pastures and crops.
Domestic dairy product production and demand are stable. Dairy
product prices have retreated from recent high levels. Other
supplying countries are filling in voids for commodity products.
Dairy product prices at current levels and offerings are
creating a sense that markets could gain support. Current
offering volumes are light from Oceania sources. Short-term
offerings have slowed as products are moving to fill contracted
volumes and to products of greatest needs. Commodity product
business is slowing seasonally. gDT: Results are noted for the
June 4th gDT session #93. The all contracts price averages (US$
per MT) and percent changes from the previous average are:
anhydrous milk fat, $4,478 -4.3%; butter, $3,743 -2.6%;
buttermilk powder, $4,410 +3.3%; cheddar cheese, $4.877 n.a.;
lactose, not traded; milk protein concentrate, not traded;
rennet casein, not traded; skim milk powder, $4,164 -3.2%; and
whole milk powder, $4,643 -7.1%.
CLASS AND COMPONENT PRICES (DAIRY PROGRAMS): The following
are the MAY 2013 prices under the Federal Milk Order pricing
system and the changes from the previous month: Class II $18.43
(-$0.30), Class III $18.52, ($+0.93), and Class IV $18.89,
(+$0.79). Component Price Information: The butterfat price for
May 2013 is $1.7884 per pound. Thus, the Class II butterfat
price is $1.7954. The protein and other solids prices for May
are $3.3597 and $0.3887 per pound, respectively. These component
prices set the Class III skim milk price at $12.71. The May
Class IV skim milk price is $13.09, which is derived from the
nonfat solids price of $1.4549 per pound. Product Price
Averages: The product price averages for May are: butter
$1.6483, NDM $1.6374, cheese $1.8274, and dry whey $0.5765.
Further information may be found at:
MAY 2013 DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter
production was 169.3 million pounds, 0.3% below April 2012 and
6.9% below March 2013. American Type Cheese production totaled
373.0 million pounds, 2.4% above April 2012 but 3.0% below March
2013. Total Cheese output (excluding cottage cheese) was 928.2
million pounds, 3.2% above April 2012 but 2.9% below March 2013.
Nonfat Dry Milk production, for human food, totaled 160.8
million pounds, 15.7% below April 2012 but 7.0% above March
2013. Dry Whey production, for human food, was 78.6 million
pounds, slightly below April 2012 and 0.1% below March 2013. Ice
Cream (hard) production totaled 71.6 million gallons, 1.5% above
April 2012 and 2.0% above March 2013.
MAY AGRICULTURE PRICES HIGHLIGHTS (NASS): The All Milk
price received by farmers was $19.80 in May, up $0.30 from April
2013 and up $3.60 from May 2012. Alfalfa hay price was $221.00
in May, up $4.00 from May 2012. Corn price was $6.88 in May, up
$0.54 from May 2012. Soybean price was $14.80 in May, up $0.80
from May 2012. The milk-feed price ratio was 1.55 in May, up
0.21 from May 2012. The index of prices received by farmers for
dairy products during the month of May 2013 was up 3 points to
152. Compared with May 2012, the index was up 28 points (22.6%).
The index of prices paid by farmers for commodities and
services, interest, taxes, and wage rates in May 2013 unchanged
at 219. Compared with May 2012, the index was up 4 points
National Dairy Market At A Glance
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