MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
January 9, 2015 MADISON, WI (REPORT 1)
CME GROUP CASH MARKETS (1/9)
BUTTER: Grade AA closed at $1.5400 on Friday. The weekly average for
Grade AA is $1.5400(-.0150)
CHEESE: Barrels closed at $1.5450 and 40# blocks at $1.5900 on
Friday. The weekly average for barrels is $1.5430(+.0636) and blocks,
BUTTER HIGHLIGHTS: Butter prices were mostly steady on the week.
The market tone is unsettled. Supplies are generally building as print
orders are stepping down considerably from peak season levels.
However, buyer interest is better than some manufacturers expected.
Many churn operators took advantage of purchasing excess cream
available at discounted prices. Production rates were steady to
higher. Bulk butter demand varies from region to region as prices are
ranging from 3.5 cents under to 6 cents over the market, based on
various time frames and averages used. Friday at the CME Group, Grade
AA butter closed at $1.54000, down $0.01500 from a week ago.
CHEESE HIGHLIGHTS: Throughout the country more milk is flowing
toward cheese plants than most people would have expected for the
first full week of January, based on looking at this period in recent
prior years. Many plants are producing cheese well ahead of orders.
There is uncertainty about cheese prices in coming weeks and months,
due to the new reality of milk supplies and production levels as well
as the difficulty of exporting cheese considering global pricing and
currency factors. In fact, increased cheese imports are challenging
domestic cheese production. According to GTIS, European cheese
exports for October to the U.S. were 25% higher than year ago levels.
Discounted milk continues to be available this week. In some parts of
the Midwest, spot milk has moved to cheese plants at $6.00 to $6.50
below Class, depending on location and timing. Sales are mixed, with
some plants moving increased product along but others report some
diminished buyer interest attributed to adopting more hand to mouth
patterns hoping for further price weakness. This leads some plants to
sustain building inventory levels beyond preferences. Dairy Products
(NASS) reports total 2014 U.S. cumulative cheese production through
November, 10.4 billion pounds, leads last year through November by
2.8%. Friday in CME Group trading, barrels closed at $1.5450, up 1/2
cent from last Friday and 40# blocks closed at $1.5900, up 2 cents
from last Friday.
FLUID MILK: Snow, ice, and subfreezing temperatures caused some
additional delays in transportation throughout many areas of the U.S.
The delays along with heavy milk supplies in several areas resulted in
a few loads being discarded. However, milk handlers noted the milk
situation is becoming more manageable. Milk production is mostly
steady coast-to-coast. Bottling sales are generally picking up with
the pipelines of K-12 schools being refilled. Condensed skim is
readily available at discounts. Class II demand for cream is reduced.
Some ice cream manufacturers restarted production following the
DRY PRODUCTS: Buyer interest for low/medium nonfat dry milk is
light and contracting is slow out of the gate for 2015 with supplies
readily available in the spot market. Dry buttermilk supplies are
exceeding demand, initiating generally lower prices on a weak market.
Dry whey prices are steady to lower on a softening market as supplies
are becoming more available. Whey protein concentrate 34% prices are
weaker on spot trades and new contract adjustments. Many buyers
reduced committed volumes for 2015. Prices of lactose were mostly
lower on weaker spot, monthly, and quarterly pricing.
INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN AND EASTERN
EUROPE: WESTERN OVERVIEW: Western Europe milk production is mixed
with some countries showing weekly intakes below year ago levels.
Overall production for Western Europe is increasing and remains above
year ago levels. Lower dairy commodity prices are foretelling
additional declines in forthcoming farmgate price adjustments.
Producers over quota are putting on the milk production brakes to
avoid paying super levees. Lower producing milk cows are being culled
at an increasing rate. Winter weather conditions have turned
seasonably cool, but are not seen as restricting milk production.
Butter and skim milk powder are the manufacturers' commodities of
choice with expanding production schedules.
EASTERN OVERVIEW: Milk production in Eastern Europe is
increasing and above year ago levels. Production in Poland is above
quota levels, but producers are expected to take measures to reduce
production in order to avoid paying levees. Loads of milk and cream
going into Belarus have been restricted, and as a result, various
commodity supplies have increased and are readily available for
export. Winter weather conditions are typical for this time of year
and are not detrimental to milk production.
OCEANIA OVERVIEW: Australian milk production is on its typical
seasonal downward trend. Dry conditions in some areas have
accelerated milk production declines in those regions. Current market
outlooks estimate this season's production to be about equal to last
year. Trading activity has been slow to develop beyond the holiday
period as market participants are waiting for an indication as to how
the market will move in the New Year. Hay demand declined over the
holiday period and resulted in a leveling off of hay prices.
Supplies of high quality hay are in short supply. Dairy producers in
Victoria are increasingly looking for vetch hay as their pastures dry
out. Many growers and traders of vetch have a majority of their
supplies either contracted or sold. According to Dairy Australia,
November 2014 milk production in Australia was 3.0% above November
2013. The state changes from a year earlier are: New South Wales,
+7.9%; Victoria, +1.9%; Queensland, -5.6%; South Australia, -2.4%;
Western Australia, +5.2% and Tasmania, +11.9%. Australia's milk
production season to date (July-November) is +3.5%, compared to last
season. Dairy Australia also reported production of various dairy
commodities for October 2014 showing the following percentage changes
compared to 2013: butter, +9.9%; butteroil, +14.2%; skim milk powder,
+11.0%; whole milk powder, -9.5%; buttermilk powder, +8.1%; cheese,
+13.3%; and whey powder, -2.5%. The combination of low payout prices
and hot, dry weather, which is limiting pasture growth, are bringing
about accelerated declines in New Zealand's milk production. Dry
conditions cover all of New Zealand, but are more severe on the South
Island and have resulted in numerous wildfires. Dairy product trading
has been very light over the yearend holiday period. Manufacturers
will be keeping a close eye on milk production declines and available
supplies to ensure that future contract commitments can be met. At
the January 6 GDT event #131, average prices ranged from 1.6% higher
to 13.2% 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, $4,493 +6.8%; butter,
$3,558 +13.2%; buttermilk powder, $2,736 +10.5%; cheddar cheese,
$3,090 +3.2%; lactose, n.a.; rennet casein, $7,911 +4.2%; skim milk
powder, $2,386 +2.8%; sweet whey powder, n.a.; and whole milk powder,
NOVEMBER DAIRY PRODUCTS (NASS): Butter production was 135.5
million pounds, 4.7% below November 2013 and 5.7% below October 2014.
American type cheese production totaled 372.3 million pounds, 4.5%
above November 2013 but 2.9% below October 2014. Total cheese output
(excluding cottage cheese) was 948.7 million pounds, 2.9% above
November 2013 but 3.3% below October 2014. Nonfat dry milk
production, for human food, totaled 150.7 million pounds, 48.9% above
November 2013 and 11.5% above October 2014. Dry whey production, for
human food, was 69.0 million pounds, 5.8% below November 2013 and 0.2%
below October 2014. Ice cream (hard) production totaled 52.6 million
gallons, 0.5% below November 2013 and 12.8% below October 2014.
SEPTEMBER MILK SALES (FMO & CDFA): During September 4.2 billion
pounds of packaged fluid milk products is estimated to have been sold
in the United States. This was 1.7% lower than September 2013.
Estimated sales of total conventional fluid milk products decreased
2.0% from September 2013 and estimated sales of total organic fluid
milk products increased 4.7% from a year earlier.
OCTOBER MILK SALES (FMO & CDFA): During October 4.4 billion
pounds of packaged fluid milk products is estimated to have been sold
in the United States. This was 2.9% lower than October 2013. Estimated
sales of total conventional fluid milk products decreased 3.5% from
October 2013 and estimated sales of total organic fluid milk products
increased 10.7% from a year earlier.
SEPTEMBER MAILBOX MILK PRICES (AMS & CDFA): In September 2014,
mailbox milk prices for selected reporting areas in Federal milk
orders averaged $25.92 per cwt, up $1.63 from the August 2014 average,
and up $5.79 per cwt from the September 2013 average. The component
tests of producer milk in September 2014 were: butterfat, 3.71%;
protein, 3.11%; and other solids, 5.73%. When compared to the previous
month, the September Mailbox prices increased in all Federal milk
order reporting areas with an average increase of $1.43/cwt. Minnesota
experienced the greatest increase of $2.54/cwt. Mailbox prices in
September 2014 ranged from $29.25 in Florida to $22.88 in New Mexico.
*****SPECIALS THIS ISSUE*****
INTERNATIONAL DAIRY MARKET NEWS (PAGE 8-8B)
DAIRY FUTURES (PAGE 9)
DECEMBER MONTHLY AVERAGES (PAGES 10-12)
NOVEMBER DAIRY PRODUCTS (PAGE 13)
SEPTEMBER MILK SALES (PAGE 14)
OCTOBER MILK SALES (PAGE 15)
SEPTEMBER MAILBOX MILK PRICES (PAGE 16)
DAIRY GRAPHS (G1-G4)
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: www.ams.usda.gov/dairymarketnews
Dairy Market News database portal: