MD_DA950 Dairy Markets at a Glance Report 29 - Released on July 22, 2022 CME GROUP CASH MARKETS (7/22) BUTTER: Grade AA closed at $2.9075. The weekly average for Grade AA is $2.9305 (-0.0165). CHEESE: Barrels closed at $1.9200 and 40# blocks at $1.9100. The weekly average for barrels is $1.9900 (-0.1475) and blocks, $1.9490 (-0.1275). NONFAT DRY MILK: Grade A closed at $1.6850. The weekly average for Grade A is $1.6735 (-0.0265). DRY WHEY: Extra grade dry whey closed at $0.4550. The weekly average for dry whey is $0.4630 (-0.0060). CHEESE HIGHLIGHTS: Throughout the country, milk production is declining, but Class III milk remains available for cheesemaking. In the Central region, spot loads of Class III are being traded for as low as $4 under. In the Northeast and West regions, cheese production is steady. Meanwhile in the Midwest, plant updates/maintenance, along with employee and supply shortages, have contributed to some production setbacks. Cheese inventories are available in the Northeast and West, but curd and barrel inventories are tight in the Midwest. Some Northeastern contacts are, reportedly, concerned about supplies outpacing demand amid soft retail sales and steady to lower food service demand. In the Midwest, cheese sales are mixed, with contacts reporting seasonally quiet demand for American style cheese, but strong demand for barrels and curds. BUTTER HIGHLIGHTS: Cream is available in the Central region, though contacts report inventories are tightening in the Northeast and West. Butter and ice cream makers are keeping demand robust, in the West. Plant managers in the Central region say labor shortages may be a new normal. Some butter makers in the Northeast are running active schedules, while others are running below capacity due to labor shortages, high cream multiples, and softening domestic demand. Meanwhile, some contacts in the West say labor shortages are causing them to run below capacity. Butter inventories are tight in the Northeast. Inflationary pressures are affecting some grocery shoppers in the Northeast and West, who may be reducing their consumption or utilizing some butter alternatives. Demand for butter is seasonally steady in the Central region. Throughout this week, CME market prices for butter have been in the low to mid $2.90s. Bulk butter overages range from 2 to 15 cents above market, across all regions. FLUID MILK: Milk flows are generally trending level to lower across the country. Summer heat and lack of precipitation in some areas, particularly in Southern states, are imperiling pasture conditions and impacting cow comfort. In the face of high feed and water expenses, contacts report an increase in farmers selling cattle into processing across Texas and Oklahoma. Farm level milk production is declining in California, but output is surpassing handler forecasts and some milk loads are moving out into neighboring states with tighter local supplies. Nationwide, Class I demand is mixed. An uptick in orders is reported in the Southeast as bottlers prepare for the upcoming school year. Cheesemaking is active, keeping Class III demand elevated. Condensed skim markets are fairly steady. Cream availability is tightening in all regions, according to stakeholders. Western butter makers and ice cream manufacturers are maintaining busy production schedules, but in the Central and East regions, demand from cream-based producers is reportedly more subdued. F.O.B. cream multiples for all Classes are ranging 1.34-1.43 in the East, 1.26-1.38 in the Midwest, and 1.08-1.36 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices dipped lower this week. In the Central and East, demand is fairly flat; some customers' stockpiles are at capacity and others are waiting to see if prices drop further. Western contacts say sales are steady within the region but describe weaker export demand. High heat NDM prices are down. Inventories are snug across regions, muting spot trading. Dry buttermilk prices are steady to lower. Spot availability is tight. Demand is level to declining. Some ice cream makers are purchasing condensed buttermilk, limiting supplies for dryers. Dry whole milk prices are unchanged. Demand is flat, and market tones are quietly steady. Prices for dry whey are mostly lower. Domestic demand is steady to softer. Some Central end users suggest there is a lack of urgency to move on loads, as prices are low and inventories are sturdy. The whey protein concentrate (WPC) 34% price range expanded. Depending on the WPC 34% specification, demand and availability vary. Lactose prices held steady on the top of the range but inched higher on the bottom. Supplies are abundant but largely committed. Prices for both acid and rennet casein are steady this week. INTERNATIONAL DAIRY MARKET NEWS: EUROPEAN DAIRY MARKET OVERVIEW: WESTERN EUROPEAN OVERVIEW: The seasonal, steady decline of European milk production stabilized for a short time in early July, but then continued the descent as heat issued into large areas of the continent. The extensive heat is negating cow comfort and suppressing milk intakes and milk components. In parts of Southern Europe, manufacturers are buying milk and skim milk concentrate from northern milk handlers to help fill the void of needed milk supplies. EU cows' milk delivered to dairies January - May 2022 is estimated at 61,480,000 MT, down 0.8 percent when compared to January - May 2021 EU milk production, according to CLAL data made available to USDA. Dairy markets are quiet as many Europeans take their summer holidays and buyer activity is seasonally lower. Buyers are hesitant to take on additional inventories of dairy supplies given higher costs and market uncertainty. EASTERN EUROPEAN OVERVIEW: Eastern European milk production is seasonally declining, but still ahead of year-to-date volumes from 2021. According to CLAL data made available to USDA, year-to-date milk deliveries through May 2022 in Poland, 5.411 million ton, increased 1.9 percent compared to year-to-date milk deliveries through May 2021. The grain harvest has started within Russia and Ukraine. Preliminary harvest projections suggest the 2022 Russian wheat harvest may be well above 2021 harvest levels. However, the Ukrainian government estimates this year's harvest at about 60 percent of last year's harvest. OCEANIA DAIRY MARKET OVERVIEW: NEW ZEALAND: In recent weeks, the GDT has seen the price for most dairy commodities continue the trend lower, with further price volatility expected over the coming months. However, reports indicate, among factors contributing to the country's current inflation rate, are higher milk and cheese prices. Higher milk prices across most of New Zealand have not encouraged milk production output. As milk producers work through the seasonal production slowdown, sources point out that most are unwilling to produce milk in excess, as they cope with current market dynamics, where surging farm input costs that include fuel, fertilizer, feed, and labor, impact farmers' outlooks for new year profitability. New Zealand's milk collections for May 2022, the last month of the current production year, posted a 6.6 percent decline, ending the 2021/2022 cycle with a 4.1 percent year-over-year reduction in milk collections. AUSTRALIA: In Australia, record milk prices are being paid across all states with the beginning of the new production season. Thanks to dynamic competition at the milk processor level along with the ongoing strength in dairy prices and a weaker Australian dollar, in Victoria, the largest milk supply region for a major cheese producer, the milk pay price is forecasted to grow between 20 -30 percent in 2023. According to Dairy Australia, July 2021 - May 2022 seasonal milk production in Australia, 7942.1 million liters, decreased 3.5 percent from July 2020 - May 2021. SOUTH AMERICA DAIRY MARKET OVERVIEW: Cooler winter weather, and precipitation in certain areas of the Southern Cone, are keeping near term expectations of milk output somewhat positive. As in other parts of the world, inflation and increasing costs-of-living are putting pressure on consumers. Dairy traders in the region are aware of this and have expressed their concerns. Powder prices were steadily lower for skim milk powder and whole milk powder, as global markets are under bearish pressure. Some contacts say South American processing and trading bloc issues are having effects on powder markets. Casein producers have also reported hurdles at the production level, but casein markets are eschewing the bearishness of other dairy powder commodity markets, based on globally tight supplies. NATIONAL RETAIL REPORT: Total conventional retail advertisement numbers decreased 16 percent this week, while organic dairy ad totals increased 11 percent. The most advertised dairy item, by a wide margin, was conventional ice cream, in 48-to-64-ounce containers, with the weighted average advertised price up one penny from last week at $3.48. Conventional butter advertisements, for one-pound packages, declined by over 50 percent this week. The weighted average advertised price of butter, $4.19, was three cents less than last week's weighted average. JUNE MILK PRODUCTION (NASS): Milk production in the 24 major States during June totaled 18.1 billion pounds, up 0.3 percent from June 2021. May revised production, at 18.9 billion pounds, was down 0.4 percent from May 2021. The May revision represented an increase of 37 million pounds or 0.2 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 2,031 pounds for June, 20 pounds above June 2021. The number of milk cows on farms in the 24 major States was 8.93 million head, 65,000 head less than June 2021, but 4,000 head more than May 2022. Milk production in the United States during the April - June quarter totaled 57.9 billion pounds, down 0.5 percent from the April - June quarter last year. The average number of milk cows in the United States during the quarter was 9.42 million head, 32,000 head more than the January - March quarter, but 87,000 head less than the same period last year. AUGUST ADVANCED CLASS MILK PRICES BY ORDER (FMMO): The base Class I price for August 2022 is $25.13 per cwt, a decrease of $0.74 per cwt when compared to July 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. For August 2022, the advanced Class IV skim milk pricing factor is $14.83 per cwt, the Class II skim milk price is $15.53 per cwt, and the Class II nonfat solids price is $1.7256 per pound. The two-week product price averages for August 2022 are: butter $2.9697, nonfat dry milk $1.8324, cheese $2.2234, and dry whey $0.5348. Information for the period July 18 - 22, 2022, 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