MD_DA950 Dairy Markets at a Glance Report 3 - Released on January 21, 2022 WEEK OF JANUARY 17 - 21, 2022 | VOLUME 89, REPORT 3 CME GROUP CASH MARKETS (1/21) BUTTER: Grade AA closed at $2.9350. The weekly average for Grade AA is $2.8744 (+0.0814). CHEESE: Barrels closed at $1.8125 and 40# blocks at $1.8075. The weekly average for barrels is $1.8725 (-0.0180) and blocks, $1.8444 (-0.1581). NONFAT DRY MILK: Grade A closed at $1.8150. The weekly average for Grade A is $1.8313 (+0.0678). DRY WHEY: Extra grade dry whey closed at $0.8000. The weekly average for dry whey is $0.7900 (+0.0255). CHEESE HIGHLIGHTS: Milk availability continues to vary for cheese producers from region to region and plant to plant, but current reports do not show a tight milk market, at least right now. Spot milk prices ranged from $1 to $.50 under Class, while last year’s range during this week was $8.50 to $4 under Class. Retail cheese demand has quieted in the Western region, while international demand remains strong. Eastern contacts say retail demand is steady/strong during football’s playoff season. Staffing shortages continue to plague plant managers, with plant workers, but also with drivers and office employees. Cheese market tones are wavering. Last week’s barrel price bullishness met and lost to bears this week. BUTTER HIGHLIGHTS: Cream supplies are available to butter makers. Some loads are traveling from the West to the Midwest. However, high freight costs, driver shortages, and inclement weather are reportedly posing some challenges to moving cream. Cream demand is firm, and butter production is active. Some Eastern manufacturers are increasing production and churning seven days a week to bulk up shrinking inventories. Microfixing is active to satisfy good retail print butter demand. In the West, operations at some butter plants are limited by labor issues and delayed production supply deliveries. Butter inventories are tight, and spot purchasers report salted is still easier to source than unsalted. Butter demand is strong in domestic and international markets. Bulk butter overages range from 8 to 19 cents above market throughout the country. FLUID MILK: While milk production varies due to inclement weather in the Midwest to Eastern regions, Class I demand continued to show promise in most areas this week. Western region milk levels are generally steady to higher. In some cases, retail bottling demand was up due to shoppers stocking up ahead of Winter Storm Izzy last weekend and current frigid temperatures covering swaths of the nation. COVID related employee shortages continue to inhibit processing/bottling plants, so in certain cases milk handlers have to find alternate homes for their milk/cream. Cheesemakers in the Midwest reported spot milk prices from $1 to $.50 under Class III, a large price increase when compared to last year. Condensed skim is noted as available, but hauling continues to burden producers and buyers, across the country. Butter churners are busily seeking cream, which remains stably available nationally. F.O.B. cream multiples are 1.15-1.32 in the East, 1.26-1.33 in the Midwest, and 1.00-1.28 in the West. DRY PRODUCTS: Most dairy powder markets remain in a bullish status this week, as tight supplies and steady to strong demand are reported. Low/medium heat nonfat dry milk (NDM) prices increased at every price point, while high heat NDM top-end prices breached the $2 mark in all regions. Dry buttermilk powder prices held steady in the Central/East on slow trading, while Western region prices increased as processors face delays and short staffing. Dry whole milk prices moved higher again, after last week’s large price hikes. Bakers are reportedly gearing up demand ahead of the spring holidays. Dry whey prices moved higher again, as some Midwestern end users reported finding loads in the high $.60s in totes, but most trades are taking place in the low/mid $.70s. Whey protein concentrate 34% prices increased on the top of the mostly and both ends of the range, as dairy protein demand is resolute. Lactose prices are unchanged, as dairy carbohydrate markets are slack when compared to the bullish protein markets. Acid and rennet casein prices are higher, on very tight supplies. INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN EUROPEAN OVERVIEW: Western European contacts voice two primary wishes for 2022. First, there is a strong desire for higher milk production. Second, they wish that logistical and worker shortage obstacles in manufacturing, transportation and shipping, would fade away. This year has begun with sources citing lower milk production than this time last year in Germany and France, the two largest Western European milk producing countries. Seasonal production is trending higher, but at a lower level than in 2021. EASTERN EUROPEAN OVERVIEW: Milk Production in Poland January – November 2021 increased 0.4 percent from January – November 2020 according to CLAL data made available to USDA. Butter production for the period was -5.6 percent. Cheese recorded the greatest increase of primary dairy products, up 3.3 percent. Among the powders, WMP was +2.3 percent and SMP was -6.5 percent. OCEANIA OVERVIEW: AUSTRALIA: Australian dairy producers expect good profitability this season. Some processors are offering higher farmgate milk prices as they seek additional volumes from geographically well-placed producers. Weather, especially heavy rain, continues to be problematic for decent pasture growth in some areas. Continuing milk supply tightness is expected to keep upward pressure on dairy product prices and ultimately, farmgate milk prices. NEW ZEALAND OVERVIEW: Many dairy market regulars in New Zealand expect the record of recent milk production undershooting year ago production to continue when December 2021 data is available. The cold and wet spring conditions that continued into November are generally thought to have been a big factor in recent lower milk output. Concerning December 2021, it is also noted that December 2020 notched very good milk production. That is another factor that will make it more difficult for December 2021 to exceed December 2020. December pasture growth was not as good as had been hoped for. Dry and hot conditions currently prevailing in New Zealand, especially the East Coast, are cited as potentially keeping a lid on January milk production. SOUTH AMERICAN OVERVIEW: Contacts in South America report facing a growing amount of concerns over staffing, feed costs, milk prices, and packaging supplies. Some reports relay milk output is expected to grow if only slightly through Q1. Powder producers report slim availability is leading to increasing costs in some areas, while others report a potential stockpiling of powders as cheese production has slowed. Still, as powders and milkfat values increase across the global community, despite the apparent obstacles, there is some cause for bullish sentiment. Acid casein and whole milk powder producers, specifically, are reporting Q1 tightness and bullish price movements. NATIONAL RETAIL REPORT (DMN): Conventional milk ads decreased by 26 percent, while organic milk ads grew by 10 percent this week. The number of ads for milk in gallon size containers decreased by 52 percent, and the weighted average advertised price decreased by $0.67 to $2.99. In contrast to this, ads for organic milk in gallon containers increased by 45 percent, while the weighted average advertised price fell to $5.19, down 1 cent from week 2. This week, the most advertised organic dairy item was milk in gallon size containers. FEBRUARY ADVANCED CLASS PRICES (FMMO): Base Class I Price: The base Class I price for February 2022 is $21.64 per cwt, an increase of $1.93 per cwt when compared to January 2022. A Class I differential for each order's principle pricing point (county) is added to the base price to determine the Class I Price. Class II Price Information: For February 2022, the advanced Class IV skim milk pricing factor is $12.97 per cwt, the Class II skim milk price is $13.67 per cwt, and the Class II nonfat solids price is $1.5189 per pound. Product Price Averages: The two-week product price averages for February 2022 are: butter $2.4454, nonfat dry milk $1.6240, cheese $1.8482, and dry whey $0.6863. Information for the period January 17 - 21, 2022, issued weekly Published by: Dairy Market News - Madison, WI ISRAEL WEBER, 608-422-8601 Email: israel.weber@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