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USDA - AMS: National Dairy Market at a Glance (2019-08-30)

USDA U.S. Department of Agriculture - August 30, 2019


     MD_DA950

     Dairy Markets at a Glance

     Report 35 - Released on August 30, 2019

     CME GROUP CASH MARKETS (8/30)
     BUTTER: Grade AA closed at $2.1900. The weekly average for Grade AA is $2.1985 (-.0955).
     CHEESE: Barrels closed at $1.7375 and 40# blocks at $1.9300. The weekly average for barrels
     is $1.6925 (-.0015) and blocks, $1.8975 (+.0010).
     NONFAT DRY MILK: Grade A closed at $1.0400. The weekly average for Grade A is $1.0415
     (+.0115).
     DRY WHEY: Extra grade dry whey closed at $.3900. The weekly average for dry whey is $.3920
     (+.0025).
          CHEESE HIGHLIGHTS: Cheese production schedules in much of the country are at or near
     capacity. Demand is strong in the Midwest and West, stable and gradually improving in the
     Northeast. Milk supplies going to cheese manufacturing vary by region: tighter but steady in
     the Northwest; adequate in the Midwest; and in good balance in the West. Midwestern spot
     milk is priced at $.50 below Class to $1.25 over Class this week. More discounted loads are
     expected to be available over the Memorial Day Weekend. Cheese is available to fill
     contracts in the Northeast. Midwest manufacturers are pushing back some cheese shipment
     dates. In the West, cheese inventories are being reduced.
          BUTTER HIGHLIGHTS:  Cream availability is varied: increasing in the West; plentiful in
     the Central Region where some manufacturers cannot use any more cream; and more available in
     the East - with loads being offered around the low to mid $1.30s. Butter manufacturers in
     the East report cream being offered to them from other regions. Butter inventories are
     stable in the East but higher in the West. Churning schedules have increased in all regions.
     This week, bulk butter prices varies among the regions: East, 5.0 to 8.0 cents over the
     market; Central, 1.25 to 4.25 cents above the market; and West, 1.0 to 7.5 cents above the
     market.
          FLUID MILK: In areas of the United States, bottlers continue to receive heavy milk
     volumes in order to fill school pipelines in the country. In some areas, balancing plants
     are not at capacity, as Class I and III sales are taking the majority of loads. In the
     Midwest, milk supplies are available to meet buyers' requests, yet component levels have not
     recovered quite yet. In Arizona, out-of-state milk is still being received, as in-state
     supplies are not sufficient. In the mountain states of Idaho, Utah and Colorado, milk
     production remains strong. Throughout the East region, milk output is fairly level to lower.
     Nationwide, condensed skim availability is growing. Milk processing is very active,
     resulting in more cream. There are more cream offers leading up to the holiday. Multiples
     dipped this week throughout all the regions. F.O.B. cream multiples are 1.31-1.40 in the
     East, 1.21-1.38 in the Midwest, and 1.05-1.31 in the West.
          DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) spot prices are mixed. Trading
     activities are steady to slower in the domestic market. Buyers from Latin America requested
     more loads this week. Market conditions are steady to slow leading up to the holiday. High
     heat NDM prices are unchanged. Outside of contracts, spot sales remain light. Dry buttermilk
     prices are mostly steady in the country. Interest is light, but demand is expected to
     strengthen once the baking season picks up. Dry whole milk prices have shifted up on the top
     of the price range. Spot trades are a bit slower currently. Whey powder spot prices are
     steady to higher throughout the U.S. Domestic market activity has been steady, while global
     sales are slower. Whey protein concentrate 34% prices are unchanged this week. Market
     conditions are fairly stable. Lactose spot prices are steady on the range, but mixed on the
     mostly series this trading week. Impacts from the African swine fever continue to weigh
     heavily on market demand. Acid and rennet casein prices are steady. Spot market activity is
     limited.
          INTERNATIONAL DAIRY MARKET NEWS: WESTERN OVERVIEW: As it now stands, on October 31,
     the United Kingdom will withdraw from the EU. With no further legislative action, that will
     result in what is called a no deal, or ³hard´ Brexit, abruptly altering decades of dairy
     production/processing/manufacturing integration between the United Kingdom and remaining EU
     countries. A number of European dairy industry professionals believe it will be necessary
     for the UK to continue to import cheese and butter to cover domestic demand. They note that
     the UK is currently a net importer of cheese and butter. Bulk milk is a big problem,
     especially because fluid milk is so perishable and bulky to transport. Industry officials
     note that currently the UK does not have the processing capacity to handle all UK milk
     production. A good deal of milk produced in Northern Ireland (UK) currently moves to the

     Republic of Ireland (EU) for processing. EASTERN OVERVIEW: Cheese exports from Belarus
     January - June 2019, 115,000 MT, increased 18.5 percent from January - June 2018, according
     to CLAL data provided to USDA. The vast majority, 109,352 MT, went to Russia, up 18 percent
     from January ± June 2018. Although butter exports from Belarus January ± June this year,
     41,000 MT decreased 4.4 percent, exports to Russia, 32,420 MT, increased 32 percent.
          OCEANIA OVERVIEW: AUSTRALIA: Australian milk production is increasing from the seasonal
     low, and the trend line typically becomes more vertical in September. However, milk
     availability is still considered tight. The short supplies have impacted whole milk powder
     production in particular. Some manufacturers report that not much WMP is being made in
     Australia now because milk is being diverted to butter/SMP, where returns are better. Recent
     rains in Northern Australia helped crop planting schedules. Unfortunately, the lack of post
     planting rain has challenged crop progress. Hay remains in short supply and new season hay
     may not be sufficient. There is more early optimism about hay in Southern Australia for this
     season. NEW ZEALAND: The recent financial write downs by a large dairy cooperative were
     received in varied ways by dairy producers. Before the formal announcement there had been a
     lingering sense that some bad news was pending. Even so, when the announcement was made,
     there was not a great feeling. The coop has been undergoing a strategic review since last
     year. Expectations are that a new strategy may be released when financial results are
     scheduled to be released on September 12.
          SOUTH AMERICA OVERVIEW: Milk production across the Southern Cone of South America
     continues to increase. While weather fluctuations in Argentina impede output from time to
     time, the trend is for growing milk volumes. Industry contacts suggest there is plenty of
     milk for processing needs, and stocks of some processed dairy goods are increasing. Demand
     for the dairy staples of butter and bottled milk/UHT is strong, but exports of skim milk
     powder and whole milk powder are below expectations. While dairy contacts say buyers are
     starting to show more interest in making purchases, the slow economy and currency issues
     within Brazil have hindered dairy sales.
          NATIONAL RETAIL REPORT (DMN): There are over sixteen times more conventional dairy ads
     than organic dairy ads. The national weighted average advertised price for conventional milk
     half gallons is $2.03, compared to $4.12 for organic milk half gallons, an organic price
     premium of $2.09. Conventional cheese ad numbers increased 30 percent. There are no ads for
     organic cheese. The weighted average advertised price for conventional yogurt in 4 to 6 oz.
     containers is $0.52. The weighted average price for organic yogurt in 4 to 6 oz.
     containers, $1.07, results in a $0.55 organic price premium.

     Information for the period August 26 - 30, 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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