National Dairy Market at a Glance
USDA - Fri Mar 15, 12:27PM CDT
MD_DA950

     Dairy Markets at a Glance

     Report 11 - Released on March 15, 2019

     CME GROUP CASH MARKETS (3/15)
     BUTTER: Grade AA closed at $2.2800. The weekly average for Grade AA is $2.2785  (-.0050).
     CHEESE: Barrels closed at $1.4925 and 40# blocks at $1.5600. The weekly average for barrels
     is $1.4350 (+.0145) and blocks, $1.5380 (-.0235).
     NONFAT DRY MILK: Grade A closed at $.9675. The weekly average for Grade A is $.9665
     (-.0110).
     DRY WHEY: Extra grade dry whey closed at $0.3200. The weekly average for dry whey is
     $0.3310 (-.0175).
          BUTTER HIGHLIGHTS: At the national level, butter production remains vigorous, in line
     with the previous weeks. Although the demand for cream along Class II processors is
     seasonally improving, butterfat intakes remain more than adequate for butter churning.
     Butter inventories continue building into cold storage for future use. Meanwhile, requests
     from retailers and restaurants are lagging a bit due to general cooler weather conditions.
     However, the spring break is near the corner and demand might shift up very soon. Bulk
     butter pricing varies among the regions: East, 5.0 cents to 8.0 cents over the market;
     Central, 5.0 cents to 7.0 cents above the market; West, 3.0 cents to 7.5 cents over the
     market, with various periods and averages used.
          CHEESE HIGHLIGHTS: Milk volumes are available as flush-like patterns have been reported
     in the West and South-Central regions. Spot milk prices ranged from $.50 to $2 under Class,
     but more are being reported near the latter. Production is continuing apace on the coastal
     regions, while Midwestern cheesemakers have begun increasing work schedules this week ahead
     of expected demand upticks in April. Demand reports in the East and West denote some
     positive sales numbers this week. Long cheese inventories remain a concern among the
     industry. Even still, market tones have picked up momentum throughout the week, particularly
     on the process side.
          FLUID MILK: Spring flush-like patterns are being reported from the West to the
     southerly Central region. An exception this week was in Arizona, where heavy rains created
     some unexpected production and hauling issues. The blizzard last week in the Pacific
     Northwest has remained a factor regarding herd health, but milk yields continue to inch up
     in the area, nonetheless. Elsewhere, weather conditions are starting to benefit cow comfort.
     Namely, the upper Midwest where temperatures are increasing. After a somewhat brutal late
     winter, spring-like conditions are beginning to emerge. Class I sales vary across the
     country. Midwestern contacts suggest continued slowness on bottler orders, as milk finds its
     way into processing plants. Cheese plant managers reported spot milk prices from $.50 to $2
      under Class III. Cream prices shifted up in the Midwest and Western regions, while holding
     steady in the East. Price upticks denote an expected tightness due to the spring holidays.
     That said, cream is currently readily available. F.O.B. cream multiples are 1.07-1.20 in
     the East, 1.15-1.23 in the Midwest, and 1.05-1.18 in the West.
          DRY PRODUCTS: Low/medium nonfat dry milk NDM prices in the United States are steady to
     lower. The demand wavered a little, but producers suggest takers are, in some cases, willing
     to pay mid to high $.90s, while the $1 spot loads are increasing more difficult to move.
     Market conditions are steady to soft. High heat NDM prices steady to decreased. Market
     conditions are steady to quiet. Dry buttermilk prices are unchanged. The demand is stable to
     light. The market tone is steady to balanced. Dry whole milk prices are steady to increased.
     Some market participants report demand is improving ahead of the upcoming spring baking
     season festivities. Dry whey prices are steady to decreased. Domestic demand is steady to
     soft. Some buyers are still analyzing the market and holding off on purchases. Whey protein
     concentrate WPC34% prices are steady to a bit lower. The demand and market conditions are
     fairly steady. The demand is stable at this time. Rennet and acid casein prices are
     unchanged this week. Market activity is steady to lower currently.
          INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: Early reporting of milk
     production in Germany and France, the two largest EU milk producers, has been higher than
     the previous year during the past two weeks. Conditions are favorable to continued strong
     milk production in coming weeks. EASTERN: Poland was among the top five cheese production
     countries in 2018, according to Eucolait. Cheese production, 865,230 MT, increased 1.9
     percent from 2018. December 2018 production increased 0.5 percent from December 2017.
     Slovakia registered one of the largest cheese production increases during 2018, 5.9
     percent, producing 37,660 MT.

          OCEANIA OVERVIEW: AUSTRALIA: Seasonal milk production in Australia, July 2018 through
     January 2019, is 5.8 percent lower than last year. January 2019 is 11.0 percent lower than
     January 2018. NEW ZEALAND: New Zealand weather since late February has been good. The year
     started dryer than desired for dairy producers. Impacts were varied. Farms without
     irrigation, or with limited irrigation, suffered more than irrigated farms. Rains through
     last weekend have begun to turn pastures tending toward brown, toward a green tinge.
          SOUTH AMERICA OVERVIEW: Continentally, farm milk production is steady to slightly up as
     temperatures remain high, very similar to the past two weeks. Sporadic rains maintained
     favorable general conditions for forage and the second harvest of maize and cotton in key
     agricultural areas. If the weather conditions remain favorable, feed costs could drop in the
     short term, helping several farmers to mitigate relatively low milk prices. In general, milk
     intakes are more than adequate for most processing needs. Fluid/UHT milk demands from
     educational institutions, retailers, and food service are improving. In the same fashion,
     interest for cream is strong ahead of the upcoming fall holiday season. The butterfat market
     is still in a bullish position as supplies remain below adequate to cover all buyers/end
     users� needs. Cheese production in very active across the continent
          NATIONAL RETAIL REPORT: Following the start of daylight savings time in most of the
     United States, conventional ice cream in 48-64 oz. containers is the most advertised
     product/category this week, with ad numbers increasing 15 percent. The national weighted
     average advertised price for conventional milk half gallons is $2.29, compared to $4.09 for
     organic milk half gallons, an organic price premium of $1.80. Conventional cheese ad numbers
     decreased 14 percent. Organic yogurt ads more than doubled but remain a small percentage of
     conventional yogurt ad numbers.
          JANUARY MILK PRODUCTION (NASS): Milk production in the 23 major States during January
     totaled 17.5 billion pounds, up 1.3 percent from January 2018. December revised production,
     at 17.1 billion pounds, was up 0.8 percent from December 2017. The December revision
     represented an increase of 2 million pounds or less than 0.1 percent from last month's
     preliminary production estimate. Production per cow in the 23 major States averaged 2,011
     pounds for January, 38 pounds above January 2018. This is the highest production per cow for
     the month of January since the 23 State series began in 2003. The number of milk cows on
     farms in the 23 major States was 8.72 million head, 52,000 head less than January 2018, but
     2,000 head more than December 2018.
          JANUARY 2019 DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 190 million
     pounds, 4.2 percent above January 2018, and 10.4 percent above December 2018. American type
     cheese production totaled 439 million pounds, 1.2 percent above January 2018, and 3.2
     percent above December 2018. Total cheese output (excluding cottage cheese) was 1.10
     billion pounds, 0.4 percent above January 2018, and 0.7 percent above December 2018. Nonfat
     dry milk production, for human food, totaled 173 million pounds, 7.7 percent above January
     2018, and 21.0 percent above December 2018. Dry whey production, for human food, was 80.0
     million pounds, 9.5 percent below January 2018, but 8.9 percent above December 2018. Ice
     cream, regular hard production totaled 53.0 million gallons, 3.2 percent below January
     2018, but 21.3 percent above December 2018.
          MARCH SUPPLY AND DEMAND ESTIMATES (WAOB): For 2019, the milk production forecast is
     lowered on smaller expected dairy cow numbers. The fat basis export forecast is reduced on
     slower expected sales of butterfat due to increased global competition. Skim-solids basis
     exports are lowered on expected strong competition in international skim milk powder markets
     and slower expected demand for whey products. The fat basis import forecast is lowered
     slightly while the skim-solids basis import forecast is unchanged. Annual product price
     forecasts for cheese, butter, nonfat dry milk (NDM) are raised from the previous month, but
     the whey price forecast is reduced slightly. The Class III price is raised as the higher
     cheese price projection more than offsets the lower whey price. The Class IV price is
     increased on higher forecast butter and NDM prices. The all milk price forecast is raised to
     average $17.00 to $17.60 per cwt.
          FEBRUARY CONSUMER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food
     category is 257.2, up 2.0 percent from 2018. The dairy products index is 216.6, up 0.1
     percent from a year ago. The following are the February 2018 to February 2019 changes for
     selected products: fresh whole milk is 0.1 percent; cheese, -1.7 percent; and butter, 3.6
     percent.
          JANUARY MILK SALES (USDA, FMMO, AND CDFS): 4.2 billion pounds of packaged fluid milk
     products were shipped by milk handlers in January 2019. This was 0.6 percent lower than a
     year earlier. Estimated sales of total conventional fluid milk products decreased 0.5
     percent from January 2018 and estimated sales of total organic fluid milk products decreased
     1.3 percent from a year earlier.

     NOTICE -USDA ANNOUNCES AMENDMENT TO CLASS I SKIM MILK PRICE FORMULA: The U.S. Department of
     Agriculture (USDA) announced March 8, 2019, an amendment to the Class I skim milk price
     formula under the Federal Milk Marketing Order (FMMO) program, in accordance with the
     Agriculture Improvement Act of 2018 (2018 Farm Bill). The change is effective May 1, 2019.
     Currently, the Class I skim milk price is calculated using the higher of the monthly
     advanced pricing factors for Class III or Class IV skim milk, which reflect dairy product
     survey prices for the two weeks prior to the price announcement, plus the applicable
     adjusted Class I differential. Because market prices for these surveyed products fluctuate,
     the �higher of� factor used to determine the Class I skim milk price can change, increasing
     risk and uncertainty associated with hedging. To address this issue, Congress determined
     that the formula for the FMMO Class I skim milk price should be the average of the monthly
     Class III and Class IV advanced pricing factors plus $0.74 per hundredweight plus the
     applicable adjusted Class I differential. In accordance with the 2018 Farm Bill, the
     amendment is effective indefinitely, until further modified, and may not be modified sooner
     than two years after the effective date of this rule. The Federal Register notice is
     available at https://www.federalregister.gov/documents/2019/03/11/2019-04347/federal-milk-
     marketing-orders-amending-the-class-i-skim-milk-price-formula

     Information for the period March 11 - 15, 2019, issued weekly

     Published by:
     Dairy Market News - Madison, WI
     JESSICA MUELLER, 608-422-8589
     Email: Jessica.Mueller@ams.usda.gov

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