MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
September 12, 2014 MADISON, WI (REPORT 37)
CME GROUP CASH MARKETS (9/12)
BUTTER: Grade AA closed at $3.0000. The weekly average for Grade AA
is $2.9860 (+.1685).
CHEESE: Barrels closed at $2.3350 and 40# blocks at $2.3500. The
weekly average for barrels is $2.3300 (+.0069) and blocks, $2.3500
BUTTER HIGHLIGHTS: Butter prices are at record highs, while
spot offerings are limited in the marketplace. Some manufacturers are
selling less cream and using more internally while others are securing
additional spot loads stemming from bottling. Domestic orders from
food service and retail accounts are picking up. The trade indicates
butter imports originating from New Zealand and Australia are in the
process of coming to the U.S. Bulk butter prices ranged from 3.5
cents under to 6 cents over market, with various time frames and
averages used. Friday at the CME Group, Grade AA butter closed at new
record high, $3.0000, up $0.1550 from last Friday.
CHEESE HIGHLIGHTS: Cheese production remains a strong
priority across much of the country. Demand is good as buyers
are looking to acquire product for fall needs. Current stocks
are mostly adequate for previously contracted volumes, but often
buyers looking for additional supplies are finding it harder to
source the added volumes. Some cheese plants are balancing
production to orders to avoid building excess inventory. Some
buyers that decided to wait for lower prices, are now finding
firm prices and tight stocks. The NASS Dairy Products report
put July 2014 total cheese production at 956.4 million pounds,
up 7% from July 2013. Cumulative total U.S. cheese production
for January-July is 6.589 billion pounds, up 2.7% from 2013.
The Foreign Agricultural Service reported January-July U.S.
cheese and curd exports at 509.7 million pounds, up 31% from
2013. Cheese and curd exports for the period equate to 8% of
U.S. total cheese production. At the CME Group, barrels closed
Friday at $2.3350 and blocks at $2.3500. Compared to last
Friday, barrels are 1 cent higher and blocks are unchanged.
FLUID MILK: Milk production is mixed in the Midwest; steady in
the Southeast, California and New Mexico; steady to lower in Utah and
Idaho; tapering in the Pacific Northwest, Northeast and Mid-Atlantic
states; and leveling off in Florida. Cream supplies tightened in all
parts of the country, with increased cream cheese demand noted as a
factor in all regions. An additional factor causing cream supply
tightness is butter manufacturers increasingly keeping cream for
butter production as they build inventories to fill fall orders.
Processors in the Midwest are experiencing increasing problems
regarding available shipping trucks as a result of increased milk
supplies and stricter trucking regulations.
DRY PRODUCTS: U.S. low heat nonfat dry milk markets are soft,
with steady to lower production noted in the East and Central regions
while some manufacturers in the West continue production as their main
end product. Most prices are lower in all regions. High heat
production is increasing seasonally in the Central region and the
West, but is steady to lower in the East. U.S. prices for dry
buttermilk are lower. Supplies vary, from mixed in the East, to
adequate in Central States, to increasing in the West, where
production is active as a sidebar to butter churning. There is a weak
undertone to dry whole milk markets, with slowing production. The dry
whey market tone is softening. Heavy cheese production is keeping
whey production heavy at a time when substitute dairy ingredient
prices are lower, as are international prices. The whey protein
concentrate 34% market is mixed with a weak undertone. Prices are
unchanged to lower. Lactose prices are generally unchanged to lower.
Supplies of ground lactose remain tight while unground lactose loads
are available from manufacturers in the Central and West regions.
Casein markets have an unsettled to weaker market tone with unchanged
INTERNATIONAL MARKET NEWS (DMN): WESTERN AND EASTERN EUROPE:
WESTERN OVERVIEW: Milk production across much of Western Europe
continues to decline seasonally, while the pace is maintaining a
margin over year ago levels in the major milk producing countries.
The second half of 2013 had more favorable milk output, so percentage
changes in the second half of 2014 will be made against a bigger base.
Weather impacts are minimal with conditions favorable for milk cows.
Pay prices for milk are good and farmers are responding. Corn silage
harvesting is active. Lower prices are noted for Western European
dairy products. Weaker trends and prices in the Oceania region are
influencing the market more than higher U.S. dairy product pricing.
World buyers are often taking longer times in negotiations and are
very cautious in securing needs in the current unsettled and weak
market environment. The Russian ban on importing dairy products
continues to cast a large shadow over the dairy markets, directly
impacting the listed countries and indirectly affecting those
countries not on the list. The E.U. Agriculture Commission has
announced emergency market support systems, including the utilization
of the PSA - Private Storage Aid - for butter, SMP, and certain
cheeses, to assist processors. Additionally, the Commission extended
the intervention program period to the end of December. EASTERN
OVERVIEW: Milk production is following recent trends across the
Eastern European countries, generally showing modest gains versus year
ago levels. Weather conditions remain fair to good for both cows and
crops. Milk prices are being adjusted lower in several countries, the
result of lower dairy product pricing. The Russian ban on dairy
product imports is affecting the broad scope of countries and former
OCEANIA OVERVIEW: Milk production in Australia is trending higher
seasonally and is reflecting improving weather, feed, and input
conditions. Weather has been favorable for cow comfort, calving, and
pasture growth. Feed costs have been relatively stable. Currently,
some areas of Australia are experiencing moisture deficits and
concerns are that the lack of rains could factor into pasture growth
in areas without access to irrigation. Analysts are forecasting
higher milk output for the milk season that began July 1. Initial,
official forecasts were for a 2% increase over the previous season.
According to Dairy Australia, July 2014 exports increased 7.5% in
volume and 0.6% in value, compared to July 2013. Skim milk powder
export volumes were 80.2% higher than a year earlier. New Zealand
milk production trends continue to build. Early indications are
nearly 10% higher than year ago levels for the first two months of the
new season. Wet weather is common over the North Island and
temperatures are moderate, creating good pasture growth. More cows
are calving, adding to the milk output. Weather is favorable on the
South Island. Calving is just beginning to build and the milk flow is
slowly increasing. Cash flows are tighter at the start of this
season, reflecting milk pay prices. Dairy product pricing is harder
to gauge as disruptions are occurring in the marketplace, generally
outside of the region. Declining prices are noted across product
categories. Buyers are more cautious in making purchases of dairy
products with the weaker trends enveloping the local and global dairy
markets. Demand from major buying countries remains light.
Processing plants are running well as the milk flow builds. The
strategy is to make the right product mix to balance buyers' needs and
SEPTEMBER MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The milk
production forecast for 2014 is raised on growth in output per cow,
but the forecast for 2015 is unchanged. Export forecasts for 2014 and
2015 are lowered as higher forecast U.S. prices for butter and cheese
make those products less competitive in world markets and sales of a
number of other dairy products are limited as well. Skim-solids and
fat-basis imports are raised for both 2014 and 2015 as supplies in
competing exporters are expected to be large while U.S. prices remain
relatively high. Butter and cheese price forecasts are raised for
2014 with strength in both expected to continue into the first part of
2015. Nonfat dry milk prices are forecast lower in 2014 and 2015.
The forecast whey price is unchanged for 2014 but is lowered
fractionally for 2015. Class III prices for 2014 and 2015 are raised.
The Class IV price is higher in 2014 but reduced in 2015. The all
milk price is raised to $23.80 to $24.00 for 2014, and is lowered for
2015 to $19.40 to $20.40.
JUNE MAILBOX MILK PRICES(AMS & CDFA): During June 2014,
mailbox milk prices for selected reporting areas in Federal milk
orders averaged $23.11, down $1.26 from the May 2014 average,
and up $3.65 from the June 2013 average. The component tests of
producer milk in May 2014 were: butterfat, 3.62%; protein,
3.03%; and other solids, 5.75%. The June Mailbox prices
decreased an average of $1.24 across all Federal milk order
reporting areas when compared to the previous month. The June
2014 mailbox prices decreased in all areas. Florida experienced
the greatest decrease of $1.63, while the Northwest States
experienced the least decrease of $0.56. Mailbox prices in June
2014 ranged from $25.78 in Florida to $20.25 in New Mexico.
*****SPECIALS THIS ISSUE*****
INTERNATIONAL DAIRY MARKET NEWS (PAGES 8-8B)
DAIRY FUTURES (PAGES 9)
SEPTEMBER MILK SUPPLY AND DEMAND ESTIMATES (PAGES 10-11)
JUNE MAILBOX MILK PRICES (PAGE 12)
DAIRY GRAPHS (G1-G3)
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