MD_DA950 Dairy Markets at a Glance Report 20 - Released on May 17, 2019 BUTTER: Grade AA closed at $2.3400. The weekly average for Grade AA is $2.3615 (+.0590). CHEESE: Barrels closed at $1.6250 and 40# blocks at $1.6725. The weekly average for barrels is $1.6175 (-.1050) and blocks, $1.6630 (-.0345). NONFAT DRY MILK: Grade A closed at $1.0475. The weekly average for Grade A is $1.0530 (-.0110). DRY WHEY: Extra grade dry whey closed at $.3400. The weekly average for dry whey is $.3400 (-.0075). CHEESE HIGHLIGHTS: Cheese demand has slumped in the Midwest, whereas, in the coastal regions, ordering is steady to strong. Midwestern cheesemakers, across the varietal spectrum, have relayed a slower week, and some expect a lull for the remainder of the month. Midwestern spot milk availability has remained somewhat steady, ranging $2 under to $2 over Class. Current spot milk discounts far from where they were last year or in 2017, when rebates reached $4.50 and $6 under Class during week 20, respectively. Western cheese inventories remain long, while the rest of the country is a little more balanced. Cheese market prices saw a negative correction from last week¶s $1.70+ prices, as both barrel and block prices slipped on back into the low and mid $1.60s, respectively. That said, contacts relay the bullish momentum is not lost, and the correction may spur on more near term purchases. BUTTER HIGHLIGHTS: This week, butter production varies from one plant to another throughout the country. So far, butter outputs are steadily decreasing when compared to Q1 production as cream volumes are being reduced seasonally. In addition, Class II processors, especially ice cream makers, continue pulling large volumes of cream, which in some cases makes it difficult for churners to access spot cream loads. In this way, some butter makers remain actively microfixing bulk butter. Bulk butter inventories continue building into cold storage. Bulk butter pricing varies among the regions: East, 6.0 cents to 8.0 cents over the market; Central, 4.0 cents to 8.0 cents above the market; West, 2.0 cents to 7.0 cents over the market, with various periods and averages used. FLUID MILK: Milk production ranges from higher to lower, depending on location within the United States. Milk output is increasing in much of the United States, but it is flat in California, Florida and the Southeast. It is falling in Arizona and New Mexico, where some feel the spring flush may be close to ending. Within the desert southwest, a few manufacturers are augmenting intakes by bringing in milk from other regions. Some Midwestern cheesemakers are content to move their excess milk south. Bottling demand is stable or decreasing as educational institutions are preparing for the summer break. As schools close for the summer, bottlers transition from school milk programs to summer meal programs. Cream availability is adequate presently, but contacts note greater availability in the East than further west. Cream multiples for all Classes are 1.27-1.31 in the East, 1.22-1.31 in the Midwest and 1.09-1.22 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk prices moved higher in the West, and are steady to higher in the Central and East. Inventories are tight, and manufacturers are trying to add more drying in light of improved market prices. High heat nonfat dry milk prices are higher on light trading. Dry buttermilk prices are steady to higher, following the lead of nonfat dry milk. The price range for dry whole milk narrowed this week. Prices for dry whey powder are mixed and the market tone is unsettled. African swine fever (ASF) and increasing tariff concerns in the Chinese market are pushing a bearish sentiment. However, prices were mostly steady to higher in the Central region, spurred on by brand preferential buying. On either coast, the dry whey price ranges narrowed. Whey protein concentrate prices were higher at the top of the mostly price series, but were otherwise steady. The market tone for lactone, like whey, is unsettled due to the growing trade issues and ASF. Prices were steady on the range, but the mostly price series expanded. Rennet and acid casein prices are unchanged. ORGANIC DAIRY MARKET NEWS (DMN): Agricultural Marketing Service (AMS) reports total organic milk products sales for March 2019 were 202 million pounds, an 8.1 percent decline from March 2018 and 4.5 percent decline, year-to-date 2019, compared with the same period in 2018. Total organic whole milk sales for March 2019, 89 million pounds, were down 1.4 percent compared with March last year, but up 2.1 percent compared with the same period in 2018. The volume of organic retail advertisements shows no significant change from last week's survey. Organic milk ads grew by 31 percent, and organic yogurt ads increased 40 percent. NATIONAL RETAIL REPORT (DMN): Conventional dairy ad numbers increased 14 percent, whereas organic dairy ad numbers remain unchanged from the previous week. The most advertised dairy product this week is conventional ice cream in 48-64 oz. containers, with an increase in ad numbers of 10 percent. Ad numbers for 1-pound butter increased 85 percent compared to last week. Conventional yogurt ad numbers were up 46 percent, while organic yogurt ads increased 40 percent. The national weighted average advertised price for conventional milk half gallons is $2.12, compared to $4.62 for organic milk half gallons, an organic price premium of $2.50. MAY SUPPLY AND DEMAND ESTIMATES (USDA, WAOB): Milk production for 2020 is forecast higher than 2019. Cheese, butter, and nonfat dry milk (NDM) prices are forecast higher than the previous year on robust demand expectations. However, the whey price forecast is slightly lower on continued softness in export demand. The 2020 all milk price is forecast at $18.80 per cwt. The 2019 milk production forecast is reduced from the previous month on declining milk cow inventories and slow growth in milk per cow. The 2019 all milk price is forecast at $18.05 per cwt. Information for the period May 13 - 17, 2019, issued weekly Published by: Dairy Market News - Madison, WI MIKE BANDLI, (608)422-8592 Email: mike.bandli@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/