MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
October 24, 2014 MADISON, WI (REPORT 43)
CME GROUP CASH MARKETS (10/24)
BUTTER: Grade AA closed at $1.8100. The weekly average for Grade AA
is $1.9495 (-.3525).
CHEESE: Barrels closed at $1.9225 and 40# blocks at $2.1400. The
weekly average for barrels is $2.0250 (-.0790) and blocks, $2.2635
BUTTER HIGHLIGHTS: Lower butter prices have sparked some buyers
to place increased holiday orders. The market tone is unclear given
the current prices and the market nearing what is seasonally the
strongest demand time of the year. Manufacturers are focused on
fulfilling domestic orders and limiting the stock building. Bulk
butter offerings are increasing. Cream supplies are heavy. However,
butter makers are reluctant to take on cream and bulk supplies outside
of prior commitments unless they have additional finished product
orders to be filled. U.S. butter prices are closing the gap between
competing global markets. However, the price spread remains enough of
a difference that export orders are limited. Bulk butter prices ranged
from 10 cents under to 6 cents over market, with various time frames
and averages used. Friday at the CME Group, Grade AA butter closed at
$1.8100, down $0.1900 from last Friday. The NASS Cold Storage report
noted U.S. butter stocks on September 30 were 146.1 million pounds,
11% lower than last month and 37% below a year ago. This week, a
cooperative export assistance program accepted requests for 3.252
million pounds of butter.
CHEESE HIGHLIGHTS: Cheese manufacturers have adequate milk
supplies for their desired production levels, even with milk output
nearing seasonal lows in some areas. Inventory levels are mostly
considered adequate, with some plants noting inventory levels being
worked lower. Both manufacturers and customers are attuned to cheese
pricing and anticipated downward price movement ahead. Most
manufacturers are scheduling production so as not to get too far ahead
of orders because they expect current prices to weaken. Some buyers
are continuing to purchase hand-to-mouth in anticipation of declining
prices. Nevertheless, a number of manufacturers have also contracted
sales ahead with buyers motivated to have assured deliveries into the
holiday season. Some buyers who have not entered into purchase
contracts, seeking last minute spot purchases this week, have been
disappointed. NASS reports that total natural cheese stocks on
September 30, 2014, were down 3% from the previous month and down 5%
from September 30, 2013. Friday at the CME Group, barrels closed at
$1.9225 down 14 3/4 cents from a week ago and 40# blocks at $2.1400,
down 14 3/4 cents.
FLUID MILK: Milk production is generally at expected levels and
overall nearing the low point of national production before increases
are expected in many areas. Mostly steady production is noted in the
Northeast, Mid-Atlantic, Midwest, California, New Mexico, the Pacific
Northwest, Idaho and Utah. Southeast milk production is mostly steady
to slightly higher, while Florida is flat. Midwest production is
strong with some plants nearing capacity, yet with declines in a few
areas. Production of holiday items such as half and half, whipping
cream and sour cream is increasing in many areas.
DRY PRODUCTS: Western low/medium heat nonfat dry milk prices are
mostly steady while central and eastern prices are mixed. The market
tone remains unsettled to weak. Milk volumes going to NDM are
increasing in all regions. High heat NDM prices are slightly lower.
Dry buttermilk prices are lower. Building inventories are motivating
sellers to attempt to move product. Dry whole milk pricing is
unchanged with light buyer demand. Dry whey prices are unchanged.
Milk supplies are contributing to higher production levels. Whey
protein concentrate 34% prices are unchanged to slightly lower on
moderate spot activity, with some buyers using nonfat dry milk in
place of WPC 34%. Prices of lactose edged higher due to new quarterly
agreements mostly on higher mesh lactose. Casein prices for rennet
and acid are unchanged.
INTERNATIONAL DAIRY MARKET NEWS(DMN): WESTERN AND EASTERN
EUROPE: WESTERN OVERVIEW: Western Europe milk production continues
to decline and is nearing the seasonal low point. Monthly-year-over
year milk production increases are narrowing and in some countries the
milk intakes are marginally below year ago levels. Farmgate prices
have declined, but are not to a level to prompt producers to lower
milk production or reduce herd sizes. Increases in global milk
production and dairy product manufacturing have pressured prices lower
for most dairy product markets and contribute to the weak undertone.
Many traders this week were attending a major food show in Paris.
EASTERN OVERVIEW: Milk production in Eastern Europe continues to
decline along the typical seasonal track. The seasonal low point in
milk production is still a few weeks ahead. Weather conditions, feed
supplies and producer margins are favorable for milk production.
Undetermined volumes of Eastern European raw milk and cream are
finding their way to Belarus manufacturing facilities. There is the
assumption that some of the manufactured dairy products from these
shipments are being exported to Russia.
OCEANIA OVERVIEW: Australian milk production is near the seasonal
peak. Milk flows going into manufacturing facilities are heavy with
most plants operating at near capacity. Supplies for all dairy
commodities are building. Weather forecasts for South Australia are
calling for continued dry weather. Temperatures are increasing with
highs approaching 30 degrees Celsius. The increased temperatures are
quickly drying out those areas that do not irrigate. The dry
conditions have already significantly reduced anticipated crop
harvests. Dairy Australia reports increased hay price volatility as
overall hay yields are being downgraded, due to the lack of rain.
Dairy producers needing hay are being urged to talk to their suppliers
now. Higher water costs and lower yields will continue to impact hay
supplies in the major dairy producing regions. According to Dairy
Australia, Australian production of various dairy commodities for July
2014 showed the following percentage changes compared to 2013: butter,
-14.8%; butteroil, +38.5%; skim milk powder, -1.2%; whole milk powder,
-8.8%; buttermilk powder, +17.1%; cheese, +1.6%; and whey powder, -
23.1%. New Zealand milk production is nearing its seasonal peak.
Weather conditions are favorable for milk production with year to date
preliminary estimates showing production 5% above year ago levels.
Rainfall is more than adequate and warmer temperatures are prompting
good forage growth. Manufacturers are operating at or near maximum
capacity in order to clear the incoming milk supply. Farmgate prices
have seen some step downs with the likelihood of additional decreases
in the future.
SEPTEMBER MILK PRODUCTION (NASS): Milk production in the 23 major
States during September totaled 15.5 billion pounds, up 4.1% from
September 2013. Production per cow averaged 1,804 pounds for
September, 56 pounds above September 2013. This is the highest
production per cow for the month of September since the 23 State
series began in 2003. The number of milk cows on farms was 8.59
million head, 78,000 head more than September 2013, and 4,000 head
more than August 2014.
SEPTEMBER COLD STORAGE (NASS): On September 30, U.S. cold
storage holdings of butter totaled 146.1 million pounds, down
11% from the previous month, and down 37% from September 2013.
Natural American cheese holdings total 631.3 million pounds, 3%
less than the previous month, and 5% less than September 2013.
Total natural cheese stocks were 1.013 billion pounds, 3% less
than last month, and 5% less than September 2013.
NOVEMBER FEDERAL ORDER ADVANCED PRICES (FMMO): Under the
Federal milk order pricing system, the base Class I price for November
2014 is $24.06. This price is derived from the advanced Class III
skim milk pricing factor of $13.25 and the advanced butterfat pricing
factor of $3.2216. A Class I differential for each order's principal
pricing point (county) is added to the base price to determine the
Class I Price. The base Class I price decreased $0.13 when compared to
the previous month of October 2014. For selected consumer products,
the price changes are: whole milk (3.25% milk fat), -$0.14, -$0.012
per gallon; reduced fat milk (2%), -$0.25, -$0.022 per gallon; fat-
free (skim milk), -$0.38, -$0.033 per gallon. The advanced Class IV
skim milk pricing factor is $11.92. Thus, the Class II skim milk price
for November 2014 is $12.62, and the Class II nonfat solids price is
$1.4022. The two-week product price averages for November 2014 are:
butter $2.8318, nonfat dry milk $1.5052, cheese $2.3001 and dry whey
SEPTEMBER PRICE AND POOL HIGHLIGHTS (DY PROGRAMS): During
September, more than 10.8 billion pounds of milk were received from
Federally pooled producers. This volume of milk is 5.1% higher than
the September 2013 volume. In September 2014 and September 2013,
there were volumes of milk not pooled due to intraorder
disadvantageous price relationships. Regulated handlers pooled 3.493
billion pounds of producer milk as Class I products, up slightly by
0.3% when compared to the previous year. Class I utilization
decreased in 6 of the 10 of the Federal Milk Order Marketing areas.
The all-market average Class utilization percentages were: Class I =
32%, Class II =11%, Class III = 47%, and Class IV = 10%. The weighted
average statistical uniform price was $25.47, $1.17 higher than last
month and $5.72 higher than last year.
*****SPECIALS THIS ISSUE*****
INTERNATIONAL DAIRY MARKET NEWS (PAGES 8-8B)
DAIRY FUTURES (PAGE 9)
SEPTEMBER MILK PRODUCTION (PAGE 10)
SEPTEMBER COLD STORAGE (PAGE 11)
NOVEMBER FEDERAL ORDER ADVANCED PRICES (PAGE 12)
SEPTEMBER PRICE AND POOL HIGHLIGHTS (PAGE 13)
DAIRY GRAPHS (G1-G4)
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