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USDA - AMS: National Dairy Market at a Glance (2019-01-18)

USDA U.S. Department of Agriculture - January 18, 2019


     Dairy Markets at a Glance

     Report 3 - Released on January 18, 2019

     BUTTER: Grade AA closed at $2.2400. The weekly average for Grade AA is $2.2515 (+.0140).
     CHEESE: Barrels closed at $1.2000 and 40# blocks at $1.4000. The weekly average for barrels
     is $1.2050 (-.0565) and blocks, $1.4090 (+.0190).
     NONFAT DRY MILK: Grade A closed at $1.0300. The weekly average for Grade A is $1.0350
     DRY WHEY: Extra grade dry whey closed at $0.5050. The weekly average for dry whey is
     $0.5130 (+.0260).
          BUTTER HIGHLIGHTS: In general, throughout the country, butter output is active as
     processors capitalize on discounted cream values. Therefore, most churns are full of cream,
     while butter makers continue seasonally building their stocks for later use, especially in
     summer. Print and bulk butter orders from retailers are surprising stronger than expected in
     some regions. 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, 2.0 cents to 7.5
     cents over the market, with various periods and averages used.
          CHEESE HIGHLIGHTS: In the coastal regions, cheese production continues actively. While
     still active in the Central region, producers are reining in manufacturing levels following
     typically heavy post-holiday inventories. Milk availability, although readily accessible,
     has settled somewhat as bottlers are taking priority. Spot milk prices ranged from $.50
     over to $2 under Class. Post-holiday cheese demand is expectedly softer. Western cheese
     contacts report production is outpacing demand. Undoubtedly, there are ample amounts of
     cheese in the warehouse. Cheese markets in the U.S. are somewhat shaky. The large block to
     barrel CME price gulf adversely affects most producers. Cheese contacts suggest the
     possibility of block prices descending toward an expected proximity, most suggest $.05 or
     thereabouts, creates buyer hesitancy.
          FLUID MILK: Nationally, farm milk output is generally steady, with some slight
     increases reported. Cow comfort has been optimal, but some harsh winter weather has
     Midwestern and Northeastern contacts concerned about the upcoming weekend. Bottlers are
     planning to get a jump on increasing supplies ahead of the forecasted winter storms. Spot
     milk available for cheese remains strong nationally, but the heavy discounts of the post-
     holiday weeks ebbed somewhat: spot milk prices ranged from $2 under to $.50 over Class III.
     Cream demand is strong, as butter churning is nearing its peak in many areas. Midwestern
     contacts suggest cream demand may remain healthy, as cream cheese producers, amongst others,
     came into 2019 light on inventories. Ice cream production is increasing, following holiday
     downtime. F.O.B. cream multiples are 1.05-1.20 in the East, 1.00-1.25 in the Midwest, and
     .95-1.16 in the West.
          DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices are up in all facets, in all
     regions. As Mexican orders increase, prices and market tones follow suit.  The high heat NDM
     price increased on the bottom of the Central/East range, while increasing on the top of the
     Western price range. Dry buttermilk prices shifted up in all regions, as well. Buttermilk
     powder buying interests are strong ahead of the spring baking season, while production
     schedules are variant within the regions. The dry whole milk price range is mixed, as
     domestic prices are higher than those of international competitors. Dry whey prices are
     steady to mixed in the Central, while increasing in the West and East. End users are
     receiving offers in the Midwest and West, but remain hesitant regarding current price
     points. Eastern buyers are more active when spots become available. Whey protein concentrate
     (WPC) 34% prices are mixed on a segmented market. As is typical with WPC 34%, brand
     specific or requirement-meeting loads are holding buyers¶ interests, while interchangeable
     WPC 34% is garnering less end user attention. Lactose prices are steady on the mostly, but
     mixed on the price range. Similar to WPC 34%, markets are mixed depending on mesh size and
     buyer requirements. Rennet and acid casein prices are lower, as buyers are acutely aware of
     the higher casein availability.
          INTERNATIONAL DAIRY MARKET NEWS: AUSTRALIA: Central and southeast Australia continue to
     suffer under intense daytime temperatures in excess of 100 degrees Fahrenheit. Some
     locations hover near 116 degrees. Cows and pastures are suffering. Much of western Australia
     reaches temperature highs into the 80s. China is the largest single market for dairy exports
     from Australia according to Dairy Australia. It is also noted that infant formula exported
     to China is now Australia¶s most valuable dairy export to any market. NEW ZEALAND:

     Temperatures in much of the North and South Islands are reaching daytime highs in the 70s
     and 80s Fahrenheit. Milk production continues to be strong. The early new year has produced
     renewed dairy product market and trading activity. Manufacturers are increasingly working to
     assure adequate low season carryover stocks are in place for June, July and August, while
     also finalizing good sales opportunities for the near term. Optimism remains that this will
     be a strong milk production season in New Zealand.
          EUROPEAN DAIRY MARKET OVERVIEW: WESTERN: The official publication last week of the
     February 1, 2019 commencement date of the EU-Japan Economic Partnership makes the agreement
     effective. Tariff concessions offered by Japan will apply to EU exports with specified
     product codes, in specified quantities, with annual adjustments spanning varied years, for
     cheese, whey, butter, SMP, WMP, buttermilk powder, condensed milk, evaporated milk,
     fermented dairy products, whipped cream in pressurized containers, casein, caseinates,
     lactose, MPC, milk and cream. EU sources believe the U.S. wants to include agriculture,
     which some EU interests oppose. More significantly, the EU is reportedly unlikely to back
     off insisting on geographical indicators as part of the agreement. The substantially
     lopsided vote in Parliament on Tuesday rejecting the Brexit deal negotiated by Prime
     Minister May leaves incredible uncertainty as to what will happen with dairy trade between
     the Republic of Ireland and the UK. EASTERN: Belarus has recently been the principal single
     source of dairy product imports by Russia. January-November 2018 Belarus exports to Russia
     overall show less dependence by Russia on Belarus. Russia has significantly increased recent
     cheese imports from all sources, but reduced imports of butter, WMP and SMP.
          SOUTH AMERICAN OVERVIEW: In Argentina, floods have harshly impacted dairy farmers
     during the past few days. Several numbers of milking cows have died, and sanitary measures
     have been lifted to control mastitis and other diseases. That said, farm milk production has
     been reduced throughout the country, while milk hauling has been a major issue. Processors
     are not receiving enough milk/cream to maximize their production. However, manufacturing of
     main dairy commodities such as cheese, yogurt, butter, and dairy powder are stable at this
     In Brazil climate conditions have been variable, but not much has changed in the dairy
     industry during the past two weeks. Farm milk output is steadily slowing down after reaching
     the top peak of the season. Manufacturing milk/cream volumes are enough to meet most
     processors needs.
          NATIONAL RETAIL REPORT (DMN): The total number of conventional dairy advertisements
     decreased 3 percent, while organic dairy ads increased 4 percent. Total conventional yogurt
     ads declined by 6 percent week over week. The total number of conventional milk ads
     decreased 19 percent. Conventional cheese ad numbers decreased 11 percent, while no ads
     were reported for organic cheese this week.
          DECEMBER COMSUMER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food
     category is 255.2, up 1.6 percent from 2017. The dairy products index is 216.7, down 0.1
     percent from a year ago. The following are the December 2017 to December 2018 changes for
     the selected products: fresh whole milk is -1.8 percent; cheese, -0.4 percent; and butter,
     -0.2 percent.
          FEBRUARY FEDERAL MILK ORDER ADVANCED PRICES (FMMO): Under the Federal milk order
     pricing system, the base Class I price for February 2019 is $15.30 per cwt. This price is
     derived from the advanced Class IV skim milk pricing factor of $6.80 and the advanced
     butterfat pricing factor of $2.4962. A Class I differential for each order's principle
     pricing point (county) is added to the base price to determine the Class I Price. The
     advanced Class IV skim milk pricing factor is $6.80. Thus, the Class II skim milk price for
     February 2019 is $7.50 per cwt, and the Class II nonfat solids price is $0.8333. The two-
     week product price averages for February 2019 are: butter $2.2328, nonfat dry milk $0.9315,
     cheese $1.3930 and dry whey $0.4793.

     Information for the period January 14 - 18, 2019, issued weekly

     Published by:
     Dairy Market News - Madison, WI
     ISRAEL WEBER, 608-422-8601

     Additional Dairy Market News Information:
     Dairy Market News (DMN) by Phone: (608)422-8602
     DMN Website:
     DMN Database Portal:

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