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USDA - AMS: National Dairy Market at a Glance (2020-01-31)

USDA U.S. Department of Agriculture - January 31, 2020


     MD_DA950

     Dairy Markets at a Glance

     Report 5 - Released on January 31, 2020

     CME GROUP CASH MARKETS (1/31)
     BUTTER: Grade AA closed at $1.9000. The weekly average for Grade AA is $1.8325 (-.0356).
     CHEESE: Barrels closed at $1.5000 and 40# blocks at $1.9200. The weekly average for barrels
     is $1.5580 (-.0576) and blocks, $1.9225 (-.0688).
     NONFAT DRY MILK: Grade A closed at $1.2400. The weekly average for Grade A is $1.2650
     (-.0275).
     DRY WHEY: Extra grade dry whey closed at $.3650. The weekly average for dry whey is $.3730
     (+.0117).
          CHEESE HIGHLIGHTS: Cheese processing is steady/busy in the nation. Spot milk prices
     were from Class III to $1.50 under for the second week in a row. During week five, spot milk
     discounts were as low as $2.75 last year and $3 in 2018. Spot milk trading was quieter this
     week. Midwestern cheese producers have said 2020 has been off to a positive start regarding
     demand. The Super Bowl, this coming Sunday, is traditionally a boon to ordering. This year
     has been no different according to contacts across the nation. Western contacts are hopeful
     grilling season ordering will pick up where the end of football season has left off.
     Overall, cheese market tones are creating some consternation among cheese contacts. A $.40+
     CME price gap from blocks to barrels does not a healthy market make. Cheese sellers are
     aware the block and barrel prices are destined to rejoin. The $1 million dollar question is
     whether blocks shift lower or barrels come up, or some of each.
          BUTTER HIGHLIGHTS: Cream supplies for butter making are readably accessible at
     relatively lower values, across the country. Cream supply is large as milk butterfat remains
     at high levels, and cream demands from Class II continue waning. Having said this, butter
     production is ongoing, helping to clear large volumes of cream. In general, the butter
     market is in a bearish state as the current supply outpaces immediate needs from buyers.
     Bulk butter inventories are steadily increasing as most butter processors prepare for the
     upcoming baking season needs. This week, bulk butter pricing varies by regions: East, 4.0
     cents to 7.0 cents over the market; Central, even to 4.0 cents above the market; West, 1.0
     cent to 7.5 cents over the market, with various periods and averages used.
          FLUID MILK: Milk production is level across most of the country. Mild winter weather,
     with the exception of a regional snowstorm here and there, has given a number of reasons for
     contacts to say cow comfort could be worse. Bottlers are amid the school semester and
     therefore most are reporting steady intakes. There also seems to be plenty of milk for other
     processing and drying needs across the country. Cheese plant managers in the upper Midwest
     reported Class III prices down to $1.50 under Class. Cream is readily available nationwide
     and has fallen to flat class price points in both the West and Midwest. Butter plants are
     full. One positive note for cream suppliers is ice cream manufacturers are slowly beginning
     to reenter the fray. F.O.B. cream multiples are 1.10-1.20 in the East, 1.00-1.20 in the
     Midwest, and 1.00-1.18 in the West.
          DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices are mixed. Demands have held
     manufacturers’ supplies fairly in balance and interest has kept markets stable. High heat
     NDM prices are steady to higher. Market conditions are bullish. Dry buttermilk prices are
     unchanged in the country. Current interest is fairly moderate and market tones are mostly
     steady. Dry whole milk prices are steady to lower. Spot sales are slower as most sales are
     from contracts. Whey powder prices are mostly steady throughout the regions. Market
     conditions are showing firmness. Whey protein concentrate 34% prices are steady to a bit
     higher. Industry contacts relay interest is strong. Lactose prices are unchanged. Trading
     activity was somewhat quiet, however there are anticipations of a firming market. Acid and
     rennet casein prices are steady. Market activities are currently healthy.
          INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPE: EU milk production during November
     2019 was up 0.9 percent from November 2018, according to Eucolait. January – November 2019
     milk production was up 0.5 percent from January – November 2018. The more positive increases
     in official November milk production data seem to be carrying forward, according to
     observations by dairy officials in parts of Western Europe. Comments are that winter has
     been mild, even slightly warm. There has been rain rather than snow in some recent weeks.
     This has contributed to a firmer start to 2020 milk production. EASTERN EUROPE: November was
     a good month for milk production in much of Eastern Europe. November 2019 milk production
     exceeded November 2018 milk production in Poland, Czech Republic, Bulgaria, Hungary,
     Slovenia, Slovakia, and the Baltic States according to ZMB. Milk production was lower in

     Croatia and Romania. AUSTRALIA: Australia received recent rains throughout much of the
     country. Rain was heavy along the north coast of New South Wales. Central regions had more
     patch rain events. More rain is hoped for. Nevertheless, the rains led to some greening of
     crops and more planting. Hay availability remains tight in much of Australia. Fire damage to
     some pastures and feed supplies is noted. Government subsidies for fodder transport remain
     in effect. In some parts of Southern Australia, where fire damage has been extensive, police
     escorts are being used to facilitate fodder movements. NEW ZEALAND: December 2019 New
     Zealand milk production reported by DCANZ was 2,722 million MT, down 0.5 percent from
     December 2018 milk production, 2,735 million MT. December 2019 milk solids, 228,700 million
     kg, are up 0.2 percent from December 2018, 228,238 million kg. SOUTH AMERICA: Farm milk
     output is seasonally declining in the key dairy basins of South America. High summer
     temperatures had taken a toll on cows' comfort, lowering their productive milk yields.
     Dryness returned in most parts of Brazil, Argentina, Paraguay, and Uruguay, diminishing the
     quality of pasture in several dairy areas. Attractive beef prices have encouraged some dairy
     farm operators to sell some heads into the meat industry, shrinking the size of their dairy
     herd. At a continental level, milk/cream volumes are less than adequate to meet all
     processing needs. However, with most educational institutions closed, more manufacturing
     milk intakes have been moving into cheese, yogurt, and milk caramel production.
          NATIONAL RETAIL REPORT (DMN): The overall number of conventional dairy product
     advertisements was unchanged compared to last week. The total number of organic dairy
     product ads decreased 9 percent. The Super Bowl is this weekend. Party food favorites
     include many dairy products ingredients. Conventional cream cheese in 8 ounce containers
     was the most advertised dairy product this week, with a 65 percent increase in ad numbers.
     Conventional butter ad numbers are unmoved from last week. The weighted average price for
     conventional 1 pound butter packages is $3.69, compared to $5.49 for organic 1 pound butter
     packages. The weighted average advertised price for conventional yogurt in 32 ounce
     containers is $3.02, compared to $3.87 for organic yogurt in 32 ounce containers, resulting
     in an organic premium of 85 cents.

     Information for the period January 27 - 31, 2020, 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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