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USDA - AMS: National Dairy Market at a Glance (2019-06-07)

USDA U.S. Department of Agriculture - June 7, 2019


     MD_DA950

     Dairy Markets at a Glance

     Report 23 - Released on June 7, 2019

     CME GROUP CASH MARKETS (6/7)
     BUTTER: Grade AA closed at $2.3975. The weekly average for Grade AA is $2.3745 (+.0020).
     CHEESE: Barrels closed at $1.5350 and 40# blocks at $1.7525. The weekly average for barrels
     is $1.5110 (-.0303) and blocks, $1.7330 (+.0424).
     NONFAT DRY MILK: Grade A closed at $1.0550. The weekly average for Grade A is $1.0540
     (+.0052).
     DRY WHEY: Extra grade dry whey closed at $.3650. The weekly average for dry whey is $.3590
     (+.0052).
          CHEESE HIGHLIGHTS: Milk is available for cheese producers nationwide. In the West,
     loads have been discounted to as low as $4 under Class, but in the Midwest, discounts
     reached only $1.50 under Class. There is a marked shift in milk access in relation to the
     past five years. Some cheesemakers are being cautious regarding milk intakes as cheese
     markets, namely the large block to barrel price gap, have created some anxiety regarding the
     near future. Cheese inventories remain long nationwide. Demand is steady to improving in
     most parts of the nation, with the exception of food service orders. Those orders have
     quieted somewhat as summer breaks have begun, or will soon begin, in school districts across
     the country.
          BUTTER HIGHLIGHTS: Although cream inventories are tightening due to strong pulls from
     ice cream makers and seasonally lower butterfat levels in the milk, cream is still available
     for churning across the nation. Furthermore, in order to capitalize on higher cream values,
     a few butter plant managers have opted to sell some of their cream loads in lieu of
     producing butter. Generally, domestic and international butter sales are unchanged from the
     previous week. Nationwide, the butter market tone is mixed as the economic dynamics of
     supply and demand vary in each region of the country.
          FLUID MILK: Farm milk yields are generally steady in the nation. In the Eastern region
     and in the mountain states of Idaho, Utah and Colorado, output is growing. Midwestern
     farmers suggest cow-comfort levels have been fairly good for steady production levels.
     Undoubtedly, Class I sales have slipped across the country as many school districts and
     colleges have begun to, or are preparing to, break for the summer. Some school lunch
     programs are continuing to maintain food service orders of fluid milk. However, in general,
     bottling is slower this week. Some market participants report milk loads are being
     transported to other neighboring states to keep volumes in good balance. Condensed skim is
     available to customers and some are seeing additional offers on the spot market. Many buyers
     are purchasing at class prices, yet some manufacturers are buying loads at a discount. Cream
     demand is mostly steady as supplies showed a little tightness in some areas. There is some
     concern regarding summer availability of cream supplies. Less cream skimmed off of milk
     headed into Class I, increased ice cream manufacturing, and lighter national milk production
     levels have some contacts expecting some strong cream multiples in the months ahead. F.O.B.
     cream multiples are 1.31-1.35 in the East, 1.20-1.32 in the Midwest, and 1.10-1.25 in the
     West.
          DRY PRODUCTS: Low/medium nonfat dry milk (NDM) spot prices are mixed in the U.S. Most
     trading has found a comfort zone at or around the midway point between $1.00 to $1.10.
     Market conditions are steady to slightly bullish. High heat NDM prices are steady to
     slightly lower. The market tone is mostly even in the country. Dry buttermilk prices are
     unchanged. Domestic demand is somewhat quiet, but Mexican buyers continue actively. The
     market tone is strong and stable. Dry whole milk prices are somewhat mixed currently.
     Inventories are balanced to meet contractual wants, but remain tight for immediate needs of
     the national spot market. The tone is in a firm position. Whey powder spot prices are steady
     to lower. Trading activities are steady to slower. Market conditions are still reeling from
     the Swine Flu epidemic, along with other trade concerns. Whey protein concentrate 34%
     prices are steady to higher. The demand is stable to active, with a few buyers seeking to
     assure coverage with additional loads. The market tone seems to be firmer presently. Lactose
     prices are unchanged this week. Some buyers and end users are eager to assure coverage, but
     prices may be slightly lower than Q2. Market conditions are unsettled. Acid and rennet
     casein prices have heightened. Recent sales in New Zealand have continued to push rennet
     casein prices higher. Also, lower availability is pressuring casein prices.
          INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: Western Europe overall
     continues to generate less milk production than many dairy processors would like. Weekly

     milk production in some of the main Western European milk producing countries in late May
     continued to not quite hit year earlier output. ZMB quick news coverage for Germany reports
     milk production through late May was 1.9 percent lower than the same period of 2018. Milk
     production in France late May was 1.0 percent below production one year ago. Many observers
     believe the seasonal peak has now passed in Germany and France. This is slightly earlier
     than typical. EASTERN: Poland ranks sixth in European milk production so far in 2019 and is
     the top producing Eastern European country. Production through March 2019 increased 3.6
     percent, as did March YOY production, according to Eucolait. A number of other Eastern
     European countries also contrast with principal Western European milk producing countries in
     having increases over 2018 both January-March YTD, as well as March YOY. These include the
     Czech Republic, Estonia, Cyprus, Lithuania, Hungary, Malta, and Romania.
          OCEANIA OVERVIEW: AUSTRALIA: Autumn is advancing throughout Australia. Cooler weather
     and frost have moved into some areas. This is encouraging accelerated activity among some
     dairy producers to secure hay and feed to last through the winter. Supplies still available
     are tight. This is resulting in higher cost and use of alternative feed. Available hay
     supplies are especially tight in Southern and Western Australia. NEW ZEALAND: April 2019
     New Zealand milk production reported by DCANZ was 1.364 million MT, down 8.4 percent from
     April 2018 milk production, 1.489 million MT. April 2019 milk solids, 136.728 million kg,
     are down 7.7 percent from April 2018, 148.177 million kg.
          SOUTH AMERICA OVERVIEW: So far this year, the adverse effects of El Niņo have remained
     relatively minimal in the main dairy basins and crop areas of the continent. In fact, during
     the past two weeks, rain showers sustained favorable corn prospects in Brazil, while in
     Argentina and Uruguay, drier conditions allowed corn/soybean crop harvesting to resume. In
     Argentina, Uruguay and Brazil, raw farm milk output is seasonally improving as temperatures
     continue falling, boosting dairy herd comfort. Nonetheless, it is important to emphasize
     that the volume of milk produced so far this year is significantly lower than levels from
     the preceding year.
          NATIONAL RETAIL REPORT (DMN): Although summer is not officially here, conventional ice
     cream marketers have yet to receive the memo. Ice cream, in 48 to 64 oz containers, remains
     the most advertised item in the country, more than doubling the amount of advertisements of
     the second most advertised item, Greek yogurt in 4 to 6 oz containers. Organic ads were led
     by half gallon milk ads and followed by 1-pound butter ads.
          APRIL AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was
     $17.70 in April, up $2.00 from April 2018. Milk Cows price was $1,140 in April, down $220
     from April 2018. Alfalfa hay price was $199.00 in April, up $16.00 from April 2018. Corn
     price was $3.52 in April, down $.06 from April 2018. Soybean price was $8.28 in April, down
     $1.57 from April 2018. The milk-feed price ratio was 2.11 in April, up 0.22 from April
     2018. The index of prices received by farmers for dairy products during the month of April
     2019 was up 1 to 88.1. Compared to April 2018, the index was up 10 points (12.8 percent).
     The index of prices paid by farmers for commodities and services, interest, taxes, and wage
     rates in April 2019 was up 0.5 to 111.1. Compared with April 2018, the index was up 2.5
     points (+2.3 percent).
          APRIL 2019 DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 167 million pounds,
     4.8 percent below April 2018, and 3.9 percent below March 2019. American type cheese
     production totaled 432 million pounds, 2.8 percent below April 2018 and 1.9 percent below
     March 2019. Total cheese output (excluding cottage cheese) was 1.08 billion pounds, 0.2
     percent above April 2018, but 3.6 percent below March 2019. Nonfat dry milk production, for
     human food, totaled 165 million pounds, 2.6 percent below April 2018, but 0.7 percent above
     March 2019. Dry whey production, for human food, was 73 million pounds, 13.8 percent below
     April 2018 and 3.0 percent below March 2019. Ice cream, regular hard production, totaled
     63.2 million gallons, 0.6 percent above April 2018, but 3.5 percent below March 2019.
          MAY CLASS AND COMPONENT PRICES (USDA, FMMO): Class Prices: The following are the May
     2019 class prices under the Federal milk order pricing system  and changes from the previous
     month: Class II: $16.48 (+$0.10), Class III: $16.38 (+$0.42), and Class IV:  $16.29
     (+$0.57). Component Price Information: Under the Federal milk order pricing system, the
     butterfat price for May 2019 is $2.5718 per pound. Thus, the Class II butterfat price is
     $2.5788 per pound. The protein and other solids prices for May 2019 are $2.1159 and $0.1847
      per pound, respectively. These component prices set the Class III skim milk price at $7.65
      per cwt. The May 2019 Class IV skim milk price is $7.55, which is derived from the nonfat
     solids price of $0.8386 per pound. Product Price Averages: The product price averages for
     May 2019 are: butter: $2.2952, nonfat dry milk: $1.0149, cheese: $1.6974 and dry whey:
     $0.3784.

     Information for the period June 3 - 7, 2019, issued weekly

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

     Additional Dairy Market News Information:
     Dairy Market News (DMN) by Phone: (608)422-8602
     DMN Website: https://www.ams.usda.gov/market-news/dairy
     DMN MARS (My Market News): https://mymarketnews.ams.usda.gov/

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