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USDA - AMS: National Dairy Market at a Glance (2019-07-19)

USDA U.S. Department of Agriculture - July 19, 2019


     MD_DA950

     Dairy Markets at a Glance

     Report 29 - Released on July 19, 2019

     CME GROUP CASH MARKETS (7/19)
     BUTTER: Grade AA closed at $2.3975. The weekly average for Grade AA is $2.4175 (+.0140).
     CHEESE: Barrels closed at $1.7050 and 40# blocks at $1.7800. The weekly average for barrels
     is $1.7005 (-.0605) and blocks, $1.7745 (-.0505).
     NONFAT DRY MILK: Grade A closed at $1.0075. The weekly average for Grade A is $1.0190
     (-.0155).
     DRY WHEY: Extra grade dry whey closed at $.3400. The weekly average for dry whey is $.3285
     (+.0060).
          CHEESE HIGHLIGHTS: East and Midwest milk availability is slighter this week, as rising
     temperatures have begun to noticeably affect farm milk output. That being said, some
     reported spot milk prices in the Midwest were still discounted, ranging from $1.25 under to
     $.75 over Class. Interestingly, reported prices last year during week 29 were higher on
     average: $.50 under to $1.00 over Class. Milk is available for Class III production in the
     West. Production activity is generally steady, quite lively throughout the country. Cheese
     demand is steady to slightly slower throughout the country. Western contacts suggest summer
     buying respites may be around the corner. Cheese market prices slipped some last week, while
     CME market prices are holding a tight range this week. Lower U.S. Dollar values have perked
     up export interests, which contacts hope to help fulfill with inventories from the West.
          BUTTER HIGHLIGHTS: Nationwide, declining farm milk production with low butterfat levels
     is boosting the competition for cream, among butter churners and Class II processors. In
     this way, butter manufacturing is steady to lower, mostly dictated by the availability of
     cream. In some cases, microfixation of stored bulk butter remains as the main production
     method of print butter to meet requests from retailers. This week, bulk butter pricing
     varies among the regions: East, 5.0 cents to 8.0 cents over the market; Central, 5.25 cents
     under the market to 7.0 cents above the market; West, 2.0 cents to 7.5 cents over the
     market, with various periods and averages used.
          FLUID MILK: Across much of the nation, milk production is in a seasonal decline.
     However, in the Pacific Northwest and the mountain states, favorable weather has allowed
     milk output to level off at peak production. Manufacturers are running at or near full
     capacity. In some regions, contacts report discounted milk is available. In the Midwest,
     spot loads range from $1.25 below Class III to $0.75 above. And in Idaho, contacts say there
     are still some distressed loads available at $4.75 below Class IV. Milk from other parts of
     the U.S. is moving into Florida to fill Class I and II orders. Nationwide, Class I orders
     are steady to trending lower, except for Arizona, where it is increasing in advance of local
     milk requests. Cream availability is declining. Multiples for all Classes are: 1.32-1.38 in
     the East; 1.20-1.38 in the Midwest; and 1.15-1.31 in the West.
          DRY PRODUCTS: Prices for nonfat dry milk are steady to lower. Most end users are
     content with current inventories and are taking a wait and see approach. Some buyers are
     making purchases as needed, or only if the price is favorable. High heat nonfat dry milk
     prices are generally weaker. Dry buttermilk prices are unchanged. Activity in the dry
     buttermilk spot market remains lackluster. Spot prices for dry whole milk are higher with
     strong demand from the bakery and confectionary sectors. Dry whey prices are steady in the
     Northeast, mixed in the Central and lower in the West. In some cases, buyers are holding out
     for lower prices. Animal feed whey prices are unchanged. Lactose prices are steady to lower.
     Contractual agreements are pulling steady volumes of lactose, but spot sales are difficult
     to secure without price concessions. Whey protein concentrate 34% prices are steady to
     higher. Somewhat limited production across the industry is keeping inventories in check. The
     price range for rennet casein expanded and acid casein prices firmed.
          INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPE OVERVIEW: With official data now
     available, January-May EU milk production is ahead of the same period last year, up 0.3
     percent according to CLAL data provided to USDA. This increase occurred in spite of declines
     in the top two milk producing countries, Germany and France. Western European observers
     expect a higher percentage annual milk production increase by the end of 2019. Some
     projections are for up to 1 percent. January-May EU cheese production, 4,020,000 MT, is
     ahead of the same period last year, up 0.2 percent according to CLAL data provided to USDA.
     Strong cheese export demand coupled with internal EU demand will keep cheese as a favored
     use of milk through 2019. That factor is expected to move annual cheese production up from
     the current 0.2 percent increase before 2019 ends. EASTERN EUROPE OVERVIEW: Milk production

     this year through May recorded increases over last year in many Eastern European countries.
     Poland, the largest Eastern European milk producing country, also recorded production
     increases through May in various dairy products: butter, +1.0 percent; cheese, +0,3
     percent; WMP, +2.4 percent; and SMP, +8.0 percent.
          OCEANIA OVERVIEW: AUSTRALIA: Rainfall and moisture conditions are mixed in this opening
     month of the new dairy season. Southwest and northern areas are very wet following heavy
     rains. However, parts of New South Wales and Gippsland are very dry and hoping for rain.
     Southern Australia has very low carryover hay from last season. The initial forecast from a
     significant Australian dairy organization is for a 3 percent to 5 percent drop in milk
     production for the 2019-20 season. NEW ZEALAND: The sale of a large cooperative dairy
     processor located on the West Coast of New Zealand to a subsidiary of a Chinese company
     seems assured. The vast majority of shareholders voted in favor of the sale. A zero carbon
     bill is under consideration in New Zealand. Provisions relate to targeted methane reductions
     by 2030, then a 2050 reduction range.
          SOUTH AMERICA OVERVIEW: During the last two weeks, dry climate favored the sowing of
     winter crops and summer crop harvesting in the main production areas of Argentina and
     Brazil, which is beneficial to dairy farmers in terms of concentrate availability. In
     general, farm milk output is trending seasonally up as temperatures continue tumbling across
     the Southern Cone region. Continentally, milk intakes are more than adequate to cover most
     processing needs. With most educational institutions on winter vacations, requests from
     bottlers are down, thus, milk volumes moving into cheese, yogurt, and butter manufacturing
     are becoming more accessible. Butter production is steadily increasing, especially in
     Uruguay and Argentina.
          NATIONAL RETAIL REPORT (DMN): Conventional dairy ad numbers decreased 3 percent this
     week, while organic dairy ad numbers dipped 45 percent. The most advertised dairy item this
     week is conventional ice cream in 48-64 ounce containers. Conventional milk ad numbers
     increased by 83 percent, while organic milk ad numbers decreased 49 percent. The national
     weighted average advertised price for conventional milk half gallons is $1.95, compared to
     $3.49 for organic milk half gallons, an organic price premium of $1.54. Organic half gallon
     milk is the most advertised organic dairy item for this advertisement promotional period.
          AUGUST ADVANCED CLASS PRICES (FMMO): The base Class I price for August 2019 is $17.89
     per cwt., an increase of $0.71 per cwt when compared to July 2019. A Class I differential
     for each order's principle pricing point (county) is added to the base price to determine
     the Class I Price. For August 2019, the advanced Class IV skim milk pricing factor is $7.87
      per cwt, the Class II skim milk price is $8.57 per cwt, and the Class II nonfat solids
     price is $0.9522 per pound. The two-week product price averages (per pound) for August 2019
      are: butter $2.3870, nonfat dry milk $1.0507, cheese $1.8061, and dry whey $0.3622.
          MAY MILK SALES (FMMO, CDFA): 3.9 billion pounds of packaged fluid milk products were
     shipped by milk handlers in May 2019. This was 0.8 percent lower than a year earlier.
     Estimated sales of total conventional fluid milk products decreased 0.8 percent from May
     2018 and estimated sales of total organic fluid milk products decreased 0.7 percent from a
     year earlier.

     Information for the period July 15 - 19, 2019, issued weekly

     Published by:
     Dairy Market News - Madison, WI
     MIKE BANDLI, (608)422-8592
     Email: mike.bandli@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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