MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
*UPDATED TO INCLUDE NATIONAL DAIRY RETAIL REPORT
JUNE 13, 2014 MADISON, WI (REPORT 24)
CME GROUP CASH MARKETS (6/13)
BUTTER: Grade AA closed at $2.1850. The weekly average for Grade AA is
CHEESE: Barrels closed at $1.9675 and 40# blocks at $2.0300. The weekly
average for barrels is $1.9650 (+.0155) and blocks, $2.0420 (+.0285).
BUTTER HIGHLIGHTS: Cream multiples firmed this week as supplies
tighten from increased demand from ice cream producers. Some butter
manufacturers were able to take advantage of the situation by selling cream
for better returns than putting it into manufacturing. However, this, along
with new churn upgrades and operators producing ice cream instead, lead to
additional butter churn operations going offline, reducing production levels.
A few butter manufacturers microfixed bulk supplies to meet print needs.
Domestic sales are mostly steady while continuing to exceed seasonal
expectations. Export orders have slowed. Inventories are light with little
headway made on rebuilding stocks. Bulk butter spot load availability is
light as prices ranged from 5 to 8 cents over the market in the Northeast,
market to 6 cents over in the Central, and 4 cents under to 2 cents over in
the West, based on the CME Group with various time frames and averages used.
Friday at the CME Group, Grade AA butter closed at $2.1850, down 3.75 cents
from a week ago. The DMN National Dairy Retail Report noted the surveyed
national weighted average price for a 1 lb. package of butter was $3.24, a 10
cent increase from two weeks ago and 27 cents above a year ago. Advertised
prices ranged from $2.00 in the Midwest and Northwest regions to $4.49 in the
Northeast region. The number of ads nationally was down 13% compared to two
weeks ago, totaling 3,571. This week, a cooperative export assistance
program accepted requests for 0.441 million pounds of butter.
CHEESE HIGHLIGHTS: Cheese production is active in the northern tier of
the U.S. as milk production levels are at peak or near maximum levels. Spot
sales of milk and condensed skim loads are being offered at discounted
prices. Some cheese plants are limiting intakes to better control
inventories. Hot weather in the South has reduced some milk intakes, but
milk for manufacturing is available to fill cheese demand. Wholesale cheese
prices are mixed as process and Swiss adjusted lower. Meanwhile block prices
moved higher. Advertised U.S. cheese prices as reported in the National
Dairy Retail Report showed lower weighted average prices for packages of 1
lb. block ($4.05, -.27) and 2 lb. block ($7.10, -.45) from two weeks ago.
Retail prices were higher for the 8 oz. block ($2.62, +.18), 8 oz. shred
($2.57, +$.20), and 1 lb. shred ($3.73, +.31) from two weeks ago. At the CME
Group this week, barrels closed Friday at $1.9675, unchanged from last Friday
and blocks closed at $2.0300, down 2 cents compared to last Friday.
FLUID MILK: Milk production is trending lower along the southern tier
of states across the nation as temperatures in the 90s to 100s have lowered
cow comfort levels. Milk production is near peak levels along the northern
tier of states across the nation with fresh cut alfalfa and supplemental
feeding being utilized to maximize milk production in the Central region.
Manufacturing milk supplies are pushing production facilities to capacity or
near capacity levels in the Northeast, Mid-Atlantic, Pacific Northwest and
northern portions of the Central region. Some spot loads of condensed skim
milk in these regions are being discounted and moved within and outside of
the regions to locations where processing capacities are available. Cream
demand is active into butter, ice cream and frozen dessert operations. Cream
supplies were tight in the East and Central regions with loads crossing state
lines to balance supplies in the West.
DRY PRODUCTS: The nonfat dry milk market is mixed with prices steady
to higher in the East and Central regions, but lower and higher in the West.
Production levels are at near capacity in the Central and Eastern regions,
while Western production is variable. Domestic demand is moderate, export
interest is steady. Dry buttermilk prices are steady to lower. Production
has declined following the decreases in butter production and increased sales
of condensed buttermilk. Inventories are moderate with some manufacturers
holdings above anticipated levels. Dry whole milk prices shifted higher on a
mixed market. Production is steady in preparation for filling Q3 contracts.
Prices for dry whey were unchanged to lower. Production is at mostly higher
levels, following cheese production increases across most the nation.
Domestic demand is moderate to good with export interest reduced as prices
are above other global markets. Whey stocks are below year ago levels, but
adequate to fill most demand needs. Whey protein concentrate 34% prices are
unchanged to lower on a mixed market. Lactose prices are unchanged to lower
on a weaker market. Finalization of Q3 contracts is at all stages, ranging
from offers being sent to signed agreements received.
ORGANIC DAIRY MARKET NEWS (DMN): The U.S. weighted average advertised
price of organic milk half gallons is $3.44, down 5 cents from 2 weeks ago.
One year ago the national price was $3.59. Organic milk gallons have a
national average price of $4.99. One year ago the price was $5.00. The
national average price of 4-6 ounce organic yogurt is $.57. 4-6 ounce
organic Greek yogurt has a national average price of $1.25, up from $1.12 two
weeks ago. 8 ounce block organic cheese has an average national price of
$3.63. 8 ounce shredded organic cheese has an average national price of
$3.62. Organic dairy suppliers are hard pressed to meet demand, according
to a manager of a national organic brand. This is not recent and it has been
coming and developing for a while, according to the manager. A result has
been more efforts by organic processors to make decisions to try and balance
supply availability among customers, by attempting to balance supplies
against an estimation of real demand, rather than produced demand.
*NATIONAL DAIRY RETAIL REPORT (DMN): June dairy month themed ads were
in abundance this survey period. A number of ads offered dairy products as
"2 for the price of 1" specials. Cottage cheese was the largest percentage
gainer in dairy ad volume, more than tripling from two weeks ago. 16 ounce
containers had a national average price of $2.33, up 14 cents from two weeks
ago and up 24 cents from a year ago. Prices ranged from $1.50 in the
Southwest to $3.38 in the Northeast. Ad volume for gallon milk more than
doubled from the last period, with a national average price of $3.20, 27
cents above two weeks ago and 26 cents above one year ago. Prices ranged
from $1.75 in the Southwest to $4.49 in the Northeast. The big percentage
gain in yogurt ad volume is for 32 ounce Greek yogurt, with ads nearly
tripling the number two weeks ago and six times greater than one year ago.
The national average price, $4.29, is up 63 cents from two weeks ago and up
66 cents from a year ago. 4-6 ounce Greek yogurt's average price, $0.99, is
up 1 cent from two weeks ago but down 2 cents from a year ago. 4-6 ounce
yogurt has an average price of $.54, up 3 cents from two weeks ago but even
with a year ago. Cheese ad volume decreased 7% nationally from two weeks
ago. The national weighted average advertised price of 8 ounce shredded
cheese, $2.57, is up 20 cents from the last report and up 25 cents from last
year. 8 ounce block cheese has an average price of $2.62, 18 cents higher
than two weeks ago and 31 cents above last year. The conventional-organic
milk half gallon price spread is $1.45. Last year at this time, the price
spread was $2.59. The spread is calculated from the conventional milk half
gallon average advertised price of $1.99, and the organic milk half-gallon
JUNE MILK SUPPLY AND DEMAND ESTIMATES (WAOB): Milk production
forecasts for 2014 and 2015 are unchanged from last month. Export forecasts
are raised on a fat basis for 2014 and 2015 with higher cheese exports.
However, growth in 2014 exports is constrained by weaker butter sales as
higher domestic prices have made U.S. butter less competitive on world
markets. Skim-solids exports reflect strength in cheese and nonfat dry milk
(NDM) exports. Imports for 2014 and 2015 are raised on higher imports of food
ingredients. Cheese and butter prices for 2014 are forecast higher on strong
demand for cheese and tight supplies of butter. The NDM price is lowered, but
the whey price forecast is unchanged. Strength in butter prices is expected
to carry into early 2015 resulting in an increase in the 2015 price, but the
prices of cheese, NDM, and whey are unchanged from last month. Class III and
Class IV prices for 2014 and 2015 are raised on stronger butterfat values.
The all milk price is forecast at $22.90 to $23.30 per cwt for 2014 and
$19.75 to $20.75 per cwt for 2015.
MILK PRODUCTION, DISPOSITION, AND INCOME, 2013 (NASS): Milk production
increased 0.3% in 2013 to 201 billion pounds. The rate per cow, at 21,822
pounds, was 102 pounds above 2012. The annual average number of milk cows on
farms was 9.22 million head, down 12,000 head from 2012. Cash receipts from
marketings of milk during 2013 totaled $40.3 billion, 8.7% higher than 2012.
Producer returns averaged $20.12 per hundredweight, 8.4% above 2012.
Marketings totaled 200.2 billion pounds, 0.3% above 2012. Marketings include
whole milk sold to plants and dealers and milk sold directly to consumers.
An estimated 980 million pounds of milk were used on farms where produced,
2.4% more than 2012. Calves were fed 90% of this milk, with the remainder
consumed in producer households.
MARCH MAILBOX MILK PRICES (AMS & CDFA): In March 2014, mailbox milk
prices for selected reporting areas in Federal milk orders averaged $25.18
per cwt., up $0.27 from the February 2014 average, and up $5.96 from the
March 2013 average. The component tests of producer milk in March 2014 were:
butterfat, 3.79%; protein, 3.16%; and other solids, 5.72%. The March Mailbox
prices increased an average of $0.30/cwt across all Federal milk order
reporting areas when compared to the previous month. The Northwest States
experienced the greatest increase of $0.73/cwt, while Minnesota experienced
the only decrease of $0.05/cwt. Mailbox prices in March 2014 ranged from
$22.96 in New Mexico to $27.27 in Florida.
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