MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
JANUARY 17, 2014 MADISON, WI (REPORT 3)
CME GROUP CASH MARKETS (1/17):
BUTTER: Grade AA closed at $1.8525. The weekly average for Grade AA
is $1.7740 (+.1260).
CHEESE: Barrels closed at $2.2025 and 40# blocks at $2.2300. The
weekly average for barrels is $2.1765 (+.0785) and blocks, $2.2115
BUTTER HIGHLIGHTS: Many butter manufacturers are busy filling
current export orders behind good sales. However, there are some
concerns about the increased butter prices possibly reducing export
interest as the U.S. price converges to the GDT and Oceania prices.
The market tone is firm with inventories being tighter than normal for
this time of year. Moderate amounts of cream supplies continue to
find their way to butter churns resulting in higher production levels.
Domestic demand is good in the Northeast and Central, while above
expectations in the West. Butter inventories are currently being
rebuilt. Current bulk butter prices are 6-8 cents over the market in
the Northeast, flat to 6 cents over in the Central, and market to 4
cents under in the West, based on the CME. Grade AA butter price
increased each day this week on the CME Group, closing 4.5 cents
higher on Friday at $1.8525, a 17.75 cent increase since last Friday.
Cooperatives Working Together (CWT) has accepted requests for export
assistance to sell 533,519 pounds of butter.
CHEESE HIGHLIGHTS: Cheese production levels continued to be
mixed this week. Increased milk supplies are available for cheese
makers. Manufacturers' responses to the additional milk are varied.
Sharply higher prices are enticing some processors to raise
production, while others worry about higher priced inventories. Super
Bowl orders are often the last big push for retail cheese demand for
the holiday season. Good export orders for the first quarter of 2014
are helping to clear inventories. Cheese prices at the CME Group this
week are higher with barrels up 4.25 cents from last Friday and blocks
3 cents higher from last week's close. Prices have moved higher on
bids. Barrels closed Friday at $2.2025 and blocks were at $2.2300.
FLUID MILK: Milk production across the nation is trending higher
along the seasonal trend. Improved weather conditions in most regions
of the country have been beneficial to milk production, especially in
the Upper Midwest and Northeast, where temperatures have returned
towards their seasonal norms. Bottling demand has improved across
most of the nation. Manufacturing plants nationwide are handling
intakes without major delays. Overall cream demand has increased
nationwide with improved Class II demand and with butter makers
willing to handle additional supplies.
DRY PRODUCTS: Nonfat dry milk prices are unchanged to higher in
a firm market. Production levels are mostly steady to higher.
Domestic demand trends are mixed. Dry buttermilk prices are mostly
higher with tight supplies and good demand. Dry whey prices moved
higher this week across the nation. Production is steady in the West
and recovering from adverse weather interruptions in the East and
Central regions. Demand is good. The whey protein concentrate 34%
market is mixed and prices are unchanged. Lactose prices are
unchanged to higher. Casein prices are unchanged.
INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN AND EASTERN
EUROPE: WESTERN OVERVIEW: Milk production in Europe is increasing at
accelerated levels, due to good milk prices and margins, mild weather,
and expanding herds in some countries. Milk production totals for
November 2013 showed year over year increases of 3.8% for France and
19.7% for Ireland. For December, the UK realized a 10.7% increase
above the previous year. Producers in some countries are going over
quota levels and willing to pay the levy rather than reduce
production. Prices and demand on the liquid market have weakened
following the yearend holidays. Dairy product market activity has
increased going into 2014. Demand is good for most products.
Supplies continue to be fairly tight with a majority of supplies
committed in Q1. Prices are stable. EASTERN OVERVIEW: Eastern
European milk production is also expanding with estimated increases in
the 2-3% range. Weather in Eastern Europe is also mild and supportive
of milk production. Russian demand for butter, cheddar cheese and
whey is providing export opportunities for Eastern manufacturers.
Russia has begun to lift its ban on Lithuanian dairy products.
OCEANIA OVERVIEW: AUSTRALIAN milk production has begun to decline at
an accelerated pace as Victoria, South Australia and portions of New
South Wales are in the midst of an intense heat wave. Temperatures
well over 100 degrees Fahrenheit are lowering cow comfort levels and
impacting milk production. Weather prior to the current heat wave
held up fairly well during December and into January, according to
various contacts, with milk production above expectations in some
areas. The current heat wave has caused numerous fires and once green
pastures will soon yellow and wither without additional rains or
irrigation. Production of all dairy products has slowed as milk
volumes have declined. A majority of available supplies of dairy
products for the first quarter are committed with premiums required to
secure spot loads in the near term. Export interest remains strong,
especially for skim and whole milk powders. China continues to be
very active in the various dairy powder markets as they try to offset
their domestic milk production shortfalls.
NEW ZEALAND milk production continues to show projected increases
of 6% or better over last year's drought shortened production season.
Since the New Year, a fair amount of rain has covered most of New
Zealand, keeping a majority of pastures in good condition. The focus
continues to be on powder production with some producers seeing the
combined margins for butter and skim milk powder equaling or
surpassing those of whole milk powder. Market activity and trading
has increased following the yearend holidays with good interest coming
from China and Southeast Asia. Most dairy product manufacturers are
attempting to build inventories of dairy products to cover needs over
the carryover period, which is typically June, July and August.
JANUARY MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The 2013 milk
production estimate is reduced from last month, based on recent milk
production data. The forecast for 2014 is raised as improving returns
are expected to support a more rapid increase in output per cow. Fat
basis imports are reduced for 2013 and 2014 on lower expected imports
of butterfat. On a skim-solids basis, imports are reduced slightly for
2013 but are unchanged for 2014. Fat basis exports are raised for both
2013 and 2014 on relatively strong demand for cheese and other
products. Skim-solids exports are reduced slightly for 2013 as NDM
exports lagged in November. However, exports are expected to
strengthen in 2014 and the skim-solids export forecast is raised.
Dairy product and milk prices for 2013 are adjusted to reflect
December data. For 2014, cheese, butter, and nonfat dry milk (NDM)
prices are raised as export and domestic demand are expected to
strengthen, but the forecast for dry whey is unchanged. The Class III
price is raised due to the higher cheese prices and the Class IV price
forecast reflects higher butter and NDM prices. The all milk price is
forecast at $20.60 to $21.40 per cwt for 2014.
12:00CT email@example.com (608)278-4156
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: www.ams.usda.gov/dairymarketnews
Dairy Market News database portal: www.marketnews.usda.gov/portal/da
National Dairy Market At A Glance