MD_DA950 Dairy Markets at a Glance Report 50 - Released on December 17, 2021 WEEK OF DECEMBER 13 - 17, 2021 | VOLUME 88, REPORT 50 CME GROUP CASH MARKETS (12/17) BUTTER: Grade AA closed at $2.0925. The weekly average for Grade AA is $2.0805 (+0.0205). CHEESE: Barrels closed at $1.6300 and 40# blocks at $1.8875. The weekly average for barrels is $1.6520 (-0.0225) and blocks, $1.9230 (+0.0745). NONFAT DRY MILK: Grade A closed at $1.6775. The weekly average for Grade A is $1.6555 (+0.0715). DRY WHEY: Extra grade dry whey closed at $0.7300. The weekly average for dry whey is $0.7160 (+0.0125). CHEESE HIGHLIGHTS: Cheese plant managers report milk is still snug, but influxes are expected to increase over the upcoming holiday weeks, as Class I and some Class III plants take some time off. Spot milk prices in the Midwest ranged from Class III up to $.50 over Class. Cheese production is generally busy. Staffing shortages remain a common theme among contact notes, but most plant managers are making due with lighter crews. Cheese demand is falling in two columns: steady and busy. Cheese inventories are adequate. Market tones lack certainty. The relatively large block-over-barrel price gap begs the question of when, and more importantly how, the CME prices converge. BUTTER HIGHLIGHTS: Cream supplies are mixed. Some spot loads are moving from the West into pockets of the Central region where local cream availability is lower. Butter production varies. In the East, where cream is very tight, some butter manufacturers are operating abbreviated churning schedules. High freight costs and driver shortages continue to delay deliveries of cream and production supplies. International butter demand is strong, but some export sales are hampered by increased delivery timelines due to port congestion. Butter inventories are declining amid hearty seasonal demand across sectors. Bulk butter is notably tight, and contacts say some unsalted stocks are depleted. Butter market tones are bullish. Across the country, bulk butter overages range from 5 to 15 cents above market. FLUID MILK: Milk production is steady to up across the regions. End-of-year plant holidays are expected to be less of a test for milk handlers this year than in 2020. Some evidence of that is the spot milk price for Class III production. Spot milk prices in the Midwest are still flat to $.50 over Class. Last year, during week 50, spot prices were $6 to $3 under Class. Western cream supplies are abundant for the most part, but Midwest and Northeast cream contacts say that is not the case in their respective regions. Cream demand is expected to ebb over the next two weeks. F.O.B. cream multiples are 1.42-1.52 in the East, 1.28-1.50 in the Midwest, and 1.15-1.37 in the West. DRY PRODUCTS: A majority of dairy powder markets are on a sleighride, but the reindeer were replaced by bulls. Low, medium high heat nonfat dry milk (NDM) prices shifted higher across the range in all regions. Trading activity picked up from last week, but some contacts foresee slower movements during the culminating weeks of 2021. Similarly, buttermilk powder prices shifted north, in all regions. Tighter cream supplies in recent weeks/months have limited churn time/buttermilk solids. Some contacts foresee holiday cream availability growth expectations creating some ease for buttermilk buyers near term. Notably tight dry whole milk stores kept prices steady on slow trading. Shifts of production from sweet whey powder to high-protein blends, such as whey protein concentrate (WPC) 80% and whey protein isolates, have created tighter dry whey inventories. Dry whey pushed up in all regions. WPC 34% prices moved up on tightening supplies and strong demand. Lactose prices were steady, as Q1 contracts progress. Casein availability remains slim, as prices move higher and demand tones from EU, New Zealand, and South American contacts all suggest strength. ORGANIC DAIRY MARKET NEWS (DMN): The Agricultural Marketing Service (AMS) reported estimated U.S. sales of total organic milk products for October 2021 were 224 million pounds, down 5.4 percent from October 2020 and down 2.6 percent year-to-date 2020. Organic whole milk sales for October 2021, 103 million pounds, were down 0.6 compared to a year earlier and down 1.1 percent year-to-date 2020. Reduced fat milk (2%) sales were 74 million pounds, down 11.4 percent from the previous year and down 3.0 percent year-to-date 2020. Retail stores across the regions adjusted organic dairy weekly specials this pre-holiday week as total ads rose 23 percent compared to previous week’s ad number. Northwest organic dairy retail ads grew 274 percent, but the Northeast upheld the highest number of organic dairy ads, with ad volume increasing 62 percent this survey week. Surveyed stores, in general, highlighted organic yogurt as ads rose 49 percent throughout the regions. Organic half gallon milk exceeded all organic dairy commodities in ad volume, up 28 percent over last week, while average retail prices declined 7 cents. NATIONAL RETAIL REPORT (DMN): ‘Tis the season for more dairy retail advertisements. Conventional and organic dairy ad numbers increased by 13 and 23 percent, respectively. Conventional ice cream, in 48-64 ounce containers, is the most advertised dairy item this week. The most ads in the organic section were milk in half gallon bottles, which held a weighted average advertised price was $4.35, resulting in a $2.36 organic premium compared to conventional half gallons, averaging $1.99. NOVEMBER CONSUMER PRICE INDEX (BLS): The November CPI for all food is 285.5, up 6.1 percent from 2020. The dairy products index is 233.2, up 1.6 percent from a year ago. The following are the November, year to year percentage changes for selected products: fresh whole milk is +6.6; cheese, -0.3; and butter, +2.4. NOVEMBER PRODUCER PRICE INDEX (BLS): The November PPI for all food is 229.1, up 11.7 percent from 2020. The dairy products index is 215.1, up 2.3 percent from a year ago. The following are the November, year to year percentage changes for selected products: fresh whole milk, 3.1; cheese, -9.2; and butter, +34.4. OCTOBER 2021 MILK SALES: Total Fluid Products Sales 3.8 billion pounds of packaged fluid milk products were shipped by milk handlers in October 2021. This was 5.2 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 5.2 percent from October 2020, and estimated sales of total organic fluid milk products decreased 5.4 percent from a year earlier. Information for the period December 13 - 17, 2021, 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