MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
October 17, 2014 MADISON, WI (REPORT 42)
CME GROUP CASH MARKETS (10/17)
BUTTER: Grade AA closed at $2.0000. The weekly average for Grade AA
is $2.3020 (-.5340).
CHEESE: Barrels closed at $2.0700 and 40# blocks at $2.2875. The
weekly average for barrels is $2.1040 (-.0100) and blocks, $2.2380
BUTTER HIGHLIGHTS: Wholesale butter prices have fallen
dramatically over the course of the week. The market tone is
softening. Current butter prices and reduced cream interest from
competing manufacturers have cream supplies readily available. Churns
rates are generally higher. Spot purchases for cream and bulk butter
are slowing. Bulk butter prices ranged from 10 cents under to 6 cents
over market, with various time frames and averages used. Manufacturers
are trying to manage inventories at low levels given the declining
prices. However, a few butter makers were left adding to warehouse
inventories as buyers are reluctant to take positions past immediate
needs. Export demand is light as international prices are
significantly lower. Ingredient buyers are exploring import
opportunities of various butterfat products. The DMN National Dairy
Retail Report noted the national weighted average advertised price for
a 1 lb. package of butter was $4.20, up $0.52 from two weeks ago.
Prices ranged from $2.99 to $4.99. According to FAS, January-August
U.S. butter imports total 11.4 million pounds, a 69% increase compared
to last year. Friday at the CME Group, Grade AA butter closed at
$2.0000, down $0.8050 from last Friday.
CHEESE HIGHLIGHTS: Cheese production varies between regions.
Production is full in the Midwest, active in the Northeast, but steady
to lower in the West, where inventory concerns cause some
manufacturers to keep production lower. Milk supplies in the West
also weigh on production schedules in contrast with the Midwest and
Northeast, where milk is readily available for cheese making. Cheese
orders are increasing in all regions, as current pricing has reduced
the impetus to buy cheese hand-to-mouth. Advertised U.S. cheese
prices as reported in the National Dairy Retail Report showed higher
weighted average prices for packages of 8 oz. block ($2.63, +.24), 2
lb. block ($7.83, +.31), 8 oz. shred ($2.69, +.40) and 1 lb. shred
($4.35, +.02) from two weeks ago. Retail prices were lower for 1 lb.
block ($4.34, -.33). Prices for domestic foreign type cheese are
declining. According to FAS, January-August U.S. quota cheese imports
total 104.5 million pounds, a 3% increase compared to last year.
Friday at the CME Group, barrels closed at $2.0700, down 3 cents from
a week ago and 40# blocks at $2.2875, up 9 cents.
FLUID MILK: Milk volumes are above last year's levels.
Regionally, output is mixed. Production is declining in Idaho,
Florida, Utah, Northwest, Northeast and Mid-Atlantic regions; but
higher in the Midwest, Southeast, Arizona, and California; while
steady in New Mexico. Manufacturing milk supplies vary from moderate
to heavy. Overall, Class I demand is steady, with noted increases in
the East and parts of the West. Cream is plentiful. Offerings are
readily available as sluggish demand pressures prices.
DRY PRODUCTS: The nonfat dry milk market is unsettled as prices
adjust lower and higher. Condensed skim sales have slowed, resulting
in increasing NDM production. Buyers of NDM are limiting purchases as
they wait for market signals to increase purchases. Weakness persists
in the dry buttermilk market. Declines in condensed buttermilk
supplies into ice cream are adding to dry buttermilk inventories. Dry
whey prices are mostly lower. Demand is moderate from contract
accounts, with forward selling. Spot purchases are often light and
dependent upon buyers' immediate needs. The whey protein concentrate
34% market continues to weaken. Other competitive ingredients are
limiting sales. Lactose prices are lower. Interest from the export
market is increasing. Suppliers are offering discounts to compete
domestically. Casein prices are unchanged.
ORGANIC DAIRY MARKET NEWS (DMN): The U.S. weighted average
advertised price of organic milk half gallons is $3.47, down 12 cents
from 2 weeks ago. The lowest price is up 19 cents to $2.69, while the
top of the price range is up 40 cents to $5.29. Ad volume for organic
8 ounce milk this period is above average for 2014. The U.S. weighted
average price is $0.92, up 7 cents from two weeks ago. Few U.S.
plants manufacture organic nonfat dry milk or organic whey, much less
readily offer it in spot sales of less than full loads. Current
pricing of organic nonfat dry milk is in the range of $4.1000 for low
medium heat, in contrast with $1.3300 to $1.5000 for conventional
nonfat dry milk in the West. Some historically conventional dairy
product processors and manufacturers located in the West, who had
ventured into organic production during recent years, have largely
ceased dealing with organic dairy. Supply and particularly the lack
of a reliable supply of organic milk in required volumes has been the
NATIONAL DAIRY RETAIL REPORT (DMN): As a sign of the season to
come, eggnog ads appeared for the first time this season and were
exclusive to the Northwest region with all half-gallon ads priced at
$3.49. Cream cheese and sour cream ads increased as the weighted
average prices declined. Cream cheese (8 ounce) has an average price
of $1.78, down 19 cents from two weeks ago. Sour cream (16 ounce) has
an average price of $1.72, down 32 cents from the last period. The
national average price of 1-pound butter, $4.20, increased 52 cents
from the last period. The national weighted average advertised cheese
price for 8 oz. blocks increased 24 cents from two weeks ago to $2.63.
The 8 oz. shred category, at $2.69, is up 40 cents from two weeks ago.
Conventional cheese ads increased 38%. Greek yogurt in 4-6 oz.
packages averaged 97 cents, up 3 cents from two weeks ago. Regular
yogurt in 4-6 oz. packages, at 51 cents, is up 5 cents from two weeks
ago. Total conventional yogurt ad numbers increased 3%. The organic
versus conventional half-gallon price spread is $1.63, up 62 cents
from two weeks ago. The price spread is the difference between the
national weighted average conventional milk price for half gallons,
$1.84, and the average for organic half-gallon milk, $3.47. Price
comparisons to year ago levels are unavailable for this report, due to
last year's governmental shut down.
INTERNATIONAL DARIY MARKET NEWS UPDATE (DMN): At the October 15
GDT event #126, average prices ranged from 5.3% lower to 7.4% higher
from the prior event across categories. The all contracts price
averages (US$ per MT) and percent changes from the previous average
are: anhydrous milk fat, $3,346 +7.4%; butter, $2,614 +3.9%;
buttermilk powder, $2,685 -3.8%; cheddar cheese, $3,007 -1.0%;
lactose, n.a.; rennet casein, $7,780 -5.3%; skim milk powder, $2,462 -
3.6%; sweet whey powder, $1,225 +4.3%; and whole milk powder, $2,503
JULY MAILBOX MILK PRICES (AMS & CDFA): In July 2014, mailbox
milk prices for selected reporting areas in Federal milk orders
averaged $23.36 per cwt, up $0.25 from the June 2014 average, and up
$4.28 per cwt from the July 2013 average. The component tests of
producer milk in July 2014 were: butterfat, 3.62%; protein, 3.02%; and
other solids, 5.75%. The July Mailbox prices increased an average of
$0.35/cwt across all Federal milk order reporting areas when compared
to the previous month. The July 2014 mailbox prices increased in all
areas except the Corn Belt States and New Mexico, where mailbox prices
remained the same as last month. Florida experienced the greatest
increase of $1.62/cwt. Mailbox prices in July 2014 ranged from $27.40
in Florida to $20.25 in New Mexico.
OCTOBER MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The milk
production forecast for 2014 is reduced from last month on slower
growth in milk per cow. However, for 2015, the production forecast is
raised as growth in output per cow is expected higher with relatively
lower-priced feed. Export forecasts for 2014 are lowered as U.S. dairy
prices are less competitive, but import forecasts are raised as
relatively high U.S. prices encourage larger imports. The trade
forecasts for 2015 are unchanged. Butter, cheese, and whey prices for
2014 are raised from last month as domestic demand continues to
support prices. Prices of these products are unchanged for 2015.
However, the nonfat dry milk (NDM) price forecasts for both 2014 and
2015 are reduced as U.S. prices are expected to decline to increase
the competitiveness of NDM exports. The Class III price for 2014 is
raised on stronger cheese and whey prices, but is unchanged for 2015.
The Class IV price is raised for 2014 as higher butter prices more
than offset the decline in NDM prices, but for 2015, the lower
forecast NDM price results in a lower Class IV price. The all milk
price is raised to $24.10 to $24.20 per cwt for 2014, and is lowered
for 2015 to $18.95 to $19.85 per cwt.
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