MD_DA950 Dairy Markets at a Glance Report 2 - Released on January 15, 2021 CME GROUP CASH MARKETS (1/15) BUTTER: Grade AA closed at $1.2900. The weekly average for Grade AA is $1.2995 (-0.1100). CHEESE: Barrels closed at $1.5725 and 40# blocks at $1.8300. The weekly average for barrels is $1.6060 (+0.0095) and blocks, $1.9120 (+0.1330). NONFAT DRY MILK: Grade A closed at $1.2000. The weekly average for Grade A is $1.1915 (+0.0120). DRY WHEY: Extra grade dry whey closed at $0.5300. The weekly average for dry whey is $0.5100 (+0.0240). CHEESE HIGHLIGHTS: Cheese production rates are busy early in the year. There is a lot of milk to contend with, as Midwestern spot milk prices range from $8.50 to $2 under Class. Last year, during week 2, spot prices ranged from $3.50 to $1 under Class. Some Western cheese manufacturers are cautious about production schedules, even with increases in demand and last week's announcement of continued food box programs. Food service sales remain subdued when compared to previous years. Cheese market prices have softened some after last week's buildup following the announcement. Still, there are some positive expectations once governmental awards are allotted. BUTTER HIGHLIGHTS: Across the nation, plant managers are seeing an increase in butter production. Butter churning coincides with in-house cream supplies that extend beyond volumes needed for customers’ near-term butter demand. Freezer stocks are growing and heavier than some manufacturers planned. Butter facilities continue to work around COVID-19 staffing issues. Retail sales are soft as stores work off holiday hangover butter. Drive up restaurant activity is growing and facilitates food service butter sales. Following the announcement of the food box programs, butter market prices got a slight bump, but have steadily declined since early last week. FLUID MILK: This week, Class I demand is reportedly steady to slightly higher. Food service orders are lighter than in previous years. Milk production is steady to higher throughout most regions. Some Eastern milk handlers are clearing milk to other regions to find processing capacity. Fairly mild winter weather has kept cow comfort at stable to good conditions. Spot milk prices in the Midwest ranged from $8.50 to $2 under Class III. Generally, there is plenty of milk and cream for all processing needs. Cream is very abundant, particularly in the Western region, where cream multiples are below flat market in some areas. Condensed skim supplies are aplenty. Condensed skim markets are weak. F.O.B. cream multiples are 1.10-1.21 in the East, 1.00-1.21 in the Midwest, and .98-1.20 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices are mostly steady in the Central and East, although prices are higher in the West. Domestic and international demands are healthy. Market conditions are steadily bullish. High heat prices are mostly unchanged. Trading activities are steady to a bit slower. Dry buttermilk prices are steady to higher. Trading activities are moderately active. Dry whole milk prices are steady. Dry whey prices are mostly higher. Market participants report export demands are solid. The market tone is firm. Whey protein concentrate 34% prices are steady to higher. There is an uptick in buyers ’ spot demands. Lactose prices are unchanged. Market conditions are balanced. Prices for acid and rennet casein are lower. Trading activities are lighter. ORGANIC DAIRY MARKET NEWS: The Agricultural Marketing Service (AMS) reports that estimated US sales of total organic milk products for November 2020 were 235 million pounds, up 6.1 percent from November 2019 and up 10.6 percent year-to-date. Organic whole milk sales for November 2020, 104 million pounds, were up 2.3 percent compared to a year earlier and up 11.5 percent compared with year-to-date 2019. Reduced fat milk (2%) sales were 82 million pounds, up 14.0 percent from the previous year and up 15.3 percent year-to- date. This week, total organic ads for surveyed retail stores increased 12 percent over the previous week’s report. The survey shows that collective organic cheese ads increased 1,445 percent, organic milk ads increased 54 percent, but organic yogurt ads declined 60 percent. The weighted average advertised price for organic half gallon milk was $3.91, compared to $1.54 for conventional half gallons, an organic premium of $2.37. The organic premium grew 33 cents from last week. NATIONAL RETAIL REPORT (DMN): This week, total conventional ad numbers decreased 12 percent, while total organic dairy advertisements increased by 12 percent. Conventional 8- ounce shred cheese was again the most advertised dairy item, followed closely by conventional Greek yogurt in 4 to 6-ounce containers. The holiday favorite, egg nog, disappeared from the retail survey this week. The weighted average advertised price for conventional 8-ounce shred cheese was $2.26, up 2 cents from last week. Organic 8-ounce shred cheese was $3.50, resulting in an organic premium of $1.24. SEPTEMBER MAILBOX MILK PRICES (FMMO): In September 2020, mailbox milk prices for selected reporting areas in Federal milk orders averaged $16.62 per cwt, down $0.75 from the August 2020 average and down $1.86 per cwt from the September 2019 average. The component tests of producer milk in September 2020 were: butterfat, 3.87 percent; protein, 3.16 percent; and other solids, 5.76 percent. JANUARY SUPPLY AND DEMAND ESTIMATES (WAOB, WASDE): The milk production estimate for 2020 and forecast for 2021 are raised from December on growth in milk per cow and higher dairy cow numbers. Fat basis imports for 2020 and 2021 are reduced from last month on lower expected imports of butterfat products. The fat basis export estimate for 2020 is unchanged, but the 2021 forecast is raised on higher expected exports of butterfat products. The skim-solids basis import estimate for 2020 is unchanged but the 2021 forecast is reduced. The skim-solids basis export estimate for 2020 is reduced on recent trade data while the 2021 forecast is unchanged. DECEMBER CONSUMER PRICE INDEX AND PRODUCER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food category is 270.0, up 3.9 percent from 2019. The dairy products index is 231.7, up 4.4 percent from a year ago. The following are the December 2019 to December 2020 changes for selected products: fresh whole milk is +7.7 percent; cheese, +3.8 percent; and butter, -0.5 percent. In December 2020, the Producer Price Index (PPI) for the all food manufacturing is 206.6, up 1.8 percent from 2019. The PPI index for manufactured dairy products is 203.6, down -2.4 percent from a year ago. The following are the December 2019 to December 2020 changes for selected products: fresh whole milk is +1.3 percent; cheese, -3.3 percent; butter, -24.3 percent; and dry milk products and mixtures, up 4.5 percent. NOVEMBER 2020 MILK SALES (FMMO): 3.8 billion pounds of packaged fluid milk products were shipped by milk handlers in November 2020. This was 4.4 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 5.0 percent from November 2019 and estimated sales of total organic fluid milk products increased 6.1 percent from a year earlier. Information for the period January 11 - 15, 2021, issued weekly Published by: Dairy Market News - Madison, WI JESSICA MUELLER, 608-422-8589 Email: jessica.mueller@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