MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
September 13, 2013 MADISON, WI (REPORT 37)
CME GROUP CASH MARKETS (9/13):
BUTTER: Grade AA closed at $1.5300. The weekly average for Grade AA is
CHEESE: Barrels closed at $1.8125 and 40# blocks at $1.8400. The weekly
average for barrels is $ 1.8075 (+.0294) and blocks, $ 1.8300 (+.0406).
BUTTER HIGHLIGHTS: Churning schedules are mixed. Western churns
are busy filling orders but Central and Northeast churns are not at
capacity. Central spot cream availability is hampering reaching full
production. Some Eastern churns not operating this week due to staff
that would normally operate churns, working on maintenance of idled
dryers, related to milk being directed into condensed skim production.
Sales across the country are generally "brisk" or "good" or
"increasing". Export demand is also strong. Bulk butter sales vary.
Western bulk butter sales are good with discounts becoming less
common. Prices for bulk butter range from market to 3 cents under the
market. Central bulk butter prices reported range from flat market to
3 cents over.
CHEESE HIGHLIGHTS: Cheese prices are higher this week. The
market tone is firm as hot weather continued to tighten the milk
supply for cheese manufacturing. Increased seasonal ordering has
begun and plants are looking for additional milk for cheese vats.
High NDM prices have more plants looking for condensed skim to fortify
vats. According to NASS's Dairy Products report, cheese production in
July was unchanged from June, but 3% higher than July 2012. Export
sales are good with the CWT program accepting requests to assist with
sales of 8.2 million pounds of cheese this week. At the CME Group,
barrels closed the week at $1.8125, up 1.25 cents from last Friday's
close. Blocks closed at $1.8400, up 3 cents from last week's close.
FLUID MILK: Milk production across much of the country is lower,
often crimping manufacturing schedules. California milk production is
lower due to heat while Arizona and part of Southern California
experienced reduced milk production as a result of heavy rain.
Arizona milk production is described as "rock bottom" for the season.
Manufacturing milk supplies were reduced in New Mexico and the Pacific
Northwest due to Class I pulls following somewhat lower milk
production. Utah and Idaho milk production is seasonally lower.
Midwest farm milk intakes stepped lower as a result of high daytime
temperatures, which is also a factor in lower milk production from New
England to the Mid-Atlantic states. Competition for milk in the East
also heightened due to extremely active production schedules at a
large yogurt plant. Florida increased weekly milk imports to 186
loads, 90 more than this time last year. Florida milk production is
expected to spiral downward for several more weeks.
DRY PRODUCTS: In the Central, Eastern and Western regions,
nonfat dry milk prices shifted higher in step with various contract
indices that increased last week. Tightening milk supplies have
reduced drying in all regions. Dry buttermilk prices are higher in
all regions. The national dry whole milk price series widened, with
some F.O.B. spot sales at lower prices. Dry whey price movements
varied by region, with Central region prices retreating on the top of
the range and mostly series as various contract indices shifted lower.
Spot load prices from manufacturers are steady to slightly lower on a
weaker market. Western dry whey prices are lower across both the full
price range and the mostly series. Various contract indices are lower
this week and are responsible for the lower overall price. Northeast
dry whey prices increased at the bottom of the range and decreased at
the top. Whey protein concentrate 34% prices are unchanged on the
mostly series on a firm market. Manufacturers report it is difficult
right now to offer spot loads to the market when production is behind
projections and some contract buyers are asking for advances on WPC
34% shipments. Central and West lactose prices are steady on the
mostly series. Prices for rennet and acid casein are unchanged for
the week, but market participants indicate demand is beginning to
INTERNATIONAL MARKET NEWS (DMN): WESTERN AND EASTERN EUROPE:
WESTERN OVERVIEW: Milk production trends are steady to seasonally
lower in Western Europe. More countries are finding milk output at
levels closer to year ago levels. Conditions are favorable for farm
production. Processors are concerned about the effect that higher
milk prices will have on upcoming milk output. There are high pricing
levels being paid by processors having to cover needs for fresh
products. This is pulling milk out of manufactured production. Cream
demand remains good and some processors are selling cream instead of
making butter. The returns are very favorable. There is active
demand for fresh, cream based products. Dairy product prices held
mostly steady this reporting period. The fluctuating Euro remains an
issue with export values. The relative pricing points make butter and
butteroil challenging to export. Values for skim milk powders and
whole milk powder are in line with Oceania and getting more interest.
Buyers are seeking coverage for both near term and fourth quarter
needs. Their challenge is to assess the need to have product in hand
versus what the future pricing will be. Whey demand is more unsettled
with some buyers out of the market. Offerings and stocks remain
mostly light. EASTERN OVERVIEW: Milk production in Eastern European
is steady with recent weeks. Weather conditions have been neutral at
the farm level. Milk supplies are seasonally adequate for processors.
Dairy product demand is fair to good. Some buyers are finding pricing
points more attractive and utilizing sources that meet their approval.
OCEANIA OVERVIEW: AUSTRALIAN milk production is steady to higher.
Levels are generally around year ago marks, but vary on locality. The
temperatures have been warm with adequate moisture for pasture and
crop growth. Conditions are favorable for the start of the new season
milk. Cows are in good condition coming off the winter season. Milk
price step-ups were recently announced by another processor. The
increasing prices are welcome news to dairy farmers. There is good
demand locally for consumer dairy products. Dairy Australia's
forecast is for milk production growth of 1-3% for the 2013/14 season,
putting output at 9.3-9.5 billion litres.
The milk production season is ramping higher in NEW ZEALAND. More
cows are calving and entering the milking string. Milk processing is
building and more plants are coming on line and seeing milk intakes.
Schedules are being negotiated to make the products of greatest needs,
which is favoring whole milk powder. Early season indications are
that milk is tracking at or slightly higher than year ago levels.
While percentage changes based on limited output times can exaggerate
a non-issue, the plus side is a positive to get production on track
after a pronounced end of the past season. Pasture conditions are
noted to be good. The recent WPC contamination was actually a non-
issue upon further testing. The news is bringing relief to all
trading partners involved. Product prices ranges were mixed this
reporting period. The trade situation is somewhat unsettled. There
are concerns about the new wave of production at the start of a year
with favorable conditions and milk pricing. Yet, pricing levels are
holding up well at the GDT auction with increased offerings. There is
fair to steady demand from China and other exporting partners. But,
there are some uneven trends from other countries, due to various
political, economic, and price level concerns.
JULY MILK SALES (FMMO & CDFA): During July, 4.1 billion pounds
of packaged fluid milk products is estimated to have been sold in the
United States. This was 0.5% lower than July 2012. Estimated sales of
total conventional fluid milk products decreased 1.2% from July 2012
and estimated sales of total organic fluid milk products increased
15.3% from a year earlier.
JUNE MAILBOX PRICES (AMS & CDFA): In June 2013, mailbox milk
prices for selected reporting areas in Federal milk orders averaged
$19.46, down $0.17 from the May 2013 average, and up $3.25 from the
June 2012 average. The component tests of producer milk in June 2013
were: butterfat, 3.64%; protein, 3.03%; and other solids, 5.75%. On
an individual reporting area basis, mailbox prices decreased in nine
Federal milk order reporting areas and increased in 10 Federal milk
order reporting areas when compared to the previous month. Mailbox
prices in June 2013 ranged from $22.30 in Florida to $17.19 in New
SEPTEMBER MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The 2013 milk
production forecast is reduced from last month, reflecting recent
slower growth in milk production. The production forecast for 2014 is
unchanged. For 2013 fat basis and skim-solids imports are lowered
slightly from last month. Exports are raised for 2013 and carried
into 2014 on strong international demand for dairy products. With
forecast export demand, fat and skim-basis ending stocks are reduced
in 2013 and 2014. Product price forecasts are mostly higher, with
strong export demand and tightening supplies supporting increases for
nonfat dry milk (NDM), butter and cheese prices in 2013 and 2014. The
whey price forecast is unchanged for 2013 but raised for 2014. With
increased product prices, Class III and Class IV price forecasts for
2013 and 2014 are higher. The all milk price is forecast at $19.70 to
$19.90 for 2013 and $19.35 to $20.35 for 2014.
*****SPECIALS THIS ISSUE*****
INTERNATIONAL DAIRY MARKET NEWS (PAGES 8-8B)
DAIRY FUTURES (PAGE 9)
JULY MILK SALES (PAGE 10)
JUNE MAILBOX PRICES (PAGE 11)
SEPTEMBER SUPPLY AND DEMAND ESTIMATES (PAGES 12-13)
DAIRY GRAPHS (G1 - G2)
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