MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
November 7, 2014 MADISON, WI (REPORT 45)
CME GROUP CASH MARKETS (11/7)
BUTTER: Grade AA closed at $2.0075. The weekly average for Grade AA
is $2.0085 (+.1685).
CHEESE: Barrels closed at $2.1200 and 40# blocks at $2.2000. The
weekly average for barrels is $2.1290 (+.0945) and blocks, $2.1780
BUTTER HIGHLIGHTS: The butter market is firming as sales into
retail and food service accounts grow seasonally. Production decisions
for churn operators vary largely on incoming orders. Butter makers are
putting increased emphasis on managing inventories closely to ensure
that minimal stock building occurs over the last two months of 2014.
Export orders are lackluster, given higher U.S. butter prices compared
to competing global markets. Domestic buyer interest is strong for
retail and food service segments, while being at moderate levels for
ingredient butter. Bulk butter prices ranged from 5 cents under to 6
cents over market, with various time frames and averages used. Friday
at the CME Group, Grade AA butter closed at $2.0075, up $0.1175 from
last Friday. The NASS Dairy Products report noted September U.S.
butter production totaled 130.1 million pounds, up 1.2% from last
month, but 1.6% lower than a year ago. January-September U.S.
production totals 1.378 billion pounds, 2.5% behind 2013 during the
same time span. According to FAS, January-September U.S. butter
exports total 139.6 million pounds, a 2% increase compared to last
CHEESE HIGHLIGHTS: Cheese orders are increasing from retail
buyers but manufacturers are being cautious about allowing inventories
to get too far beyond order requirements. Milk is readily available
in all regions and many cheese plants have active current schedules to
fill pre-holiday orders. A concern of manufacturers is the lower
price levels of foreign cheese relative to prevailing prices in the
U.S. Nevertheless, in some plants with committed milk supplies,
manufacturing cheese is preferred to using milk to manufacture other
dry dairy products at current pricing. The Foreign Agricultural
Service (FAS), reports that September 2014 U.S. cheese and curd
exports totaled 61.4 million pounds, a 9% increase from a year ago.
Dairy Products (NASS) reports total 2014 U.S. cumulative cheese
production through September, 8.47 billion pounds, leads last year
through September by 2.7%. Friday at the CME Group, barrels closed at
$2.1200 up 1 cent from a week ago and 40# blocks at $2.2000, up 6
cents from a week ago.
FLUID MILK: On farm milk production is steady across the
northern tier of states. Milk haulers serving those regions indicated
declines in milk load volumes have tapered down. In the South Central
and Southwest areas, California and Florida, milk production is
increasing. Milder weather throughout this southern tier has improved
cow comfort. Bottler orders are generally steady to declining as some
school systems will not operate meal programs next Tuesday. However,
orders for Thanksgiving week are increasing as that is generally an
active week for consumer sales of milk products.
DRY PRODUCTS: Dry dairy product prices are weakening as nearing
year end accountings have sparked a need for sales to lessen
inventories. Low/medium heat nonfat dry milk markets have been
unsettled during the last month, but buyers and sellers connected at
lower prices during the week. High heat NDM markets are mixed. Dry
buttermilk markets are weak, and regional supplies are uneven. Buyers
are shopping based on price, location, and destination. Dry whey
markets are soft, with Western, Central, and Northeast prices trending
lower. As lower international prices stanch export sales, domestic
dry whey inventories are building. The lactose market is soft.
Inventories at some locations are building and many offshore buyers
are content to negotiate slowly. The whey protein concentrate 34%
market is seeking support near the price level of NDM. FOB spot
trading was at generally lower prices. Dry whole milk and casein
prices are steady.
INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN AND EASTERN
EUROPE: WESTERN OVERVIEW: Western Europe milk production has
declined to its lowest levels of the season. Week to week production
levels are mixed with some countries continuing to decline, others are
showing steady production, and a few are showing some marginal
increases. Demand for fresh milk products is good. Milk prices have
declined but are still at profitable levels which encourage milk
production. Production in most countries is above year ago levels.
Estat - Newcronos reported EU-28 January to August milk deliveries are
5.6% higher than the same period in 2013. Various member states
showed the following January to August increases compared to last
year: Germany, 4.3%; France, 6.8%; UK, 9.8%; Belgium, 7.8%; Italy,
3.5%; and Ireland, 6.4%. January-August milk delivery data showed
increases for all countries in Western Europe with the exception of
Greece -4.6%. EASTERN OVERVIEW: Milk production in Eastern Europe
continues to decline, but remains significantly above year ago levels.
An undetermined amount of cream and raw milk is making its way to
Belarus manufacturing plants. Skim milk powder manufacturers in
Poland and Finland saw increased exports to China during September.
European milk deliveries for January-August reported by Estat -
Newcronos, showed the following year over year changes for selected
countries: Poland,+7.4%; Lithuania, +8.0%; Latvia, +11.5%; Estonia,
+8.4%; and the Czech Republic, +0.6%. OCEANIA OVERVIEW: Australian
milk production has peaked in most states with intakes above year ago
levels. Domestic dairy commodity stocks are rebuilding with
additional supplies available for the export market. Concerns are
growing regarding the dry conditions, especially in southwest
Victoria. The dry conditions will reduce grazing and force producers
to start supplemental feeding if rains do not come soon. The dairy
markets have a bearish undertone with some analysts not anticipating a
rebound in the current trends until mid-2015. Some cooperatives have
scaled back their financial profit outlooks for the 2014-15 production
year noting expanded global milk supplies, lower dairy commodity
prices and greater market uncertainty as contributing factors.
According to Dairy Australia, September 2014 milk production in
Australia was 4.2% above September 2013. The state changes from a year
earlier are: New South Wales, +1.8%; Victoria, +3.9%; Queensland, -
4.4%; South Australia, +0.4%; Western Australia, +6.1% and Tasmania
+16.2%. Dairy Australia reports Australian production of various
dairy commodities for August 2014 showed the following percentage
changes compared to 2013: butter, -3.1%; butteroil, +10.4%; skim milk
powder, +0.4%; whole milk powder, -42.6%; buttermilk powder, -1.8%;
cheese, +9.6%; and whey powder, +1.1%. Dairy Australia reports dairy
product exports for the July-September period totaling 161.8 thousand
MT, up 8.3% from the year ago period. The skim milk powder (SMP)
exports were up 54% for the same period last year. The total value of
exports for the July-September period is down 2.5%. New Zealand milk
production is very strong with volumes above year ago levels. The
seasonal peak in production will be reached this week in some areas
with volumes at or exceeding historic highs. Weather conditions are
favorable and pastures and feed supplies are in good condition.
Processors are attempting to clear the heavy milk volumes as quickly
as possible. August milk production as reported by DCANZ was 1.39
million MT, up 4.5% from August 2013 and 14.1% higher than the level
two years ago. August milksolids reflected a 6.2% increase compared
August 2013. At the November 4 GDT event #127, average prices ranged
from 9.2% lower to 1.6% higher from the prior event across categories.
The all contracts price averages (US$ per MT) and percent changes from
the previous average are: anhydrous milk fat, $3,292 -1.6%; butter,
$2,505 -4.1%; buttermilk powder, $2,426 -6.9%; cheddar cheese, $2,728
-9.2%; lactose, n.a.; rennet casein, $7,608 -2.2%; skim milk powder,
$2,457 -1.2%; sweet whey powder, n.a.; and whole milk powder, $2,522
OCTOBER AGRICULTURAL PRICES (NASS): The All Milk price received
by farmers was $25.30 in October, down $0.40 from September 2014, but
up $4.40 from October 2013. Milk Cows price was $2,120 in October, up
$710 from October 2013. Alfalfa hay price was $194.00 in October, up
$1.00 from October 2013. Corn price was $3.28 in October, down $1.35
from October 2013. Soybean price was $9.64 in October, down $2.86 from
October 2013. The milk-feed price ratio was 3.07 in October, up 0.94
from October 2013. The index of prices received by farmers for dairy
products during the month of October 2014 was down 2 points to 126.
Compared to October 2013, the index was up 22 points (21.2%). The
index of prices paid by farmers for commodities and services,
interest, taxes, and wage rates in October 2014 was unchanged at 112.
Compared with October 2013, the index was up 6 points (5.7%).
SEPTEMBER DAIRY PRODUCTS (NASS): Butter production was 130.1
million pounds, 1.6% below September 2013, but 1.2% above August 2014.
American type cheese production totaled 361.1 million pounds, 4.0%
above September 2013, but 3.4% below August 2014. Total cheese output
(excluding cottage cheese) was 941.6 million pounds, 4.7% above
September 2013 and 0.2% above August 2014. Nonfat dry milk
production, for human food, totaled 114.1 million pounds, 54.1% above
September 2013, but 3.3% below August 2014. Dry whey production, for
human food, was 68.2 million pounds, 2.5% below September 2013 and
0.6% below August 2014. Ice cream regular (hard) production totaled
61.7 million gallons, 1.8% below September 2013 and 6.5% below August
OCTOBER FEDERAL MILK ORDER CLASS AND COMPONENT PRICES (DAIRY
PROGRAMS): The following are the October 2014 prices under the
Federal Milk Order pricing system and the changes from the previous
month: Class II $21.93 (-$4.18), Class III $23.82 (-$0.78), and Class
IV $21.35 (-$1.23). Under the Federal milk order pricing system, the
butterfat price for October 2014 is $2.8507 per pound. Thus, the
Class II butterfat price is $2.8577 per pound. The protein and other
solids prices for October 2014 are $3.7362 and $0.4670 per pound,
respectively. These component prices set the Class III skim milk
price at $14.34. The October 2014 Class IV skim milk price is $11.78,
which is derived from the nonfat solids price of $1.3090 per pound.
The product price averages for October 2014 are: butter: $2.5255,
nonfat dry milk: $1.4900, cheese: $2.2914, and dry whey: $0.6525.
CONSUMER PRICE INDEX (BLS): The CPI for all food is 244.6, up
3.0% from 2013. The dairy products index is 227.6, up 4.9% from a
year ago. The following are the September to September changes for
selected products: fresh whole milk is +8.7%; cheese, +6.8%; and
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: www.ams.usda.gov/dairymarketnews
Dairy Market News database portal: www.marketnews.usda.gov/portal/da