MD_DA950 Dairy Markets at a Glance Report 13 - Released on March 29, 2019 CME GROUP CASH MARKETS (3/29) BUTTER: Grade AA closed at $2.2550. The weekly average for Grade AA is $2.2670 (-.0110). CHEESE: Barrels closed at $1.6025 and 40# blocks at $1.6450. The weekly average for barrels is $1.5890 (+.0535) and blocks, $1.6845 (+.1090). NONFAT DRY MILK: Grade A closed at $.9625. The weekly average for Grade A is $.9605 (N.C.). DRY WHEY: Extra grade dry whey closed at $0.3225. The weekly average for dry whey is $.3225 (+.0090). BUTTER HIGHLIGHTS: At a national level, butter processing is ongoing, while producers continue to build inventories for future usage, particularly to fulfill the anticipated strong demands during the upcoming seasonal festivities. Cream is readily accessible to most butter makers. Nevertheless, Class II and other users are actively drawing out some cream as well. Bulk/print butter sales to retailers and food service accounts are reported as good and inching up. Bulk butter pricing varies among the regions: East, 5.0 cents to 8.0 cents over the market; Central, 5.0 cents to 7.0 cents above the market; West, 3.0 cents to 7.5 cents over the market, with various periods and averages used. Today¶s CME Group cash price for Grade AA butter is $2.2550, down $0.0100, compared to last Friday¶s price. CHEESE HIGHLIGHTS: Strong milk yield is guaranteeing continuous cheese production in all the regions. Nonetheless, in California, there have been some shifts in the types of cheese produced and some holdbacks on cheese production volumes as well. Altogether, cheese inventories remain strong. In the Midwest, supplies are being managed in a way to control further growth. There is a seasonal increase in cheese buying in most areas due, in part, to spring holiday demand. Barrel cheese is receiving most of the added interest. Uncertainty in the cheese market remains present and is reflected in the price gap between blocks and barrels. FLUID MILK: Milk off the farms is seasonally higher in the U.S. except in Florida and in the mountain states of Idaho, Utah and Colorado, where it is stabilizing. In most parts of the central region, the effects of the floods on milk output, dairy herds and feedstocks are not fully known yet. Milk volumes are adequate to fill current obligations in all the regions, and less milk seems to be moving among regions. Class I sales are steady to lower in the East and the Midwest, partly due to school closing schedules. In the West, milk distribution to bottlers is mixed. Cream demand is generally stable to up in the country, and some loads are being used for the upcoming holiday order fulfillments. Cream multiples for all Classes are 1.15-1.28 in the East, 1.10-1.28 in the Midwest, and 1.06-1.20 in the West. Condensed skim requests are flat to increasing in the East. At some western localities, prices are higher than expected. DRY PRODUCTS: The low/medium heat nonfat dry milk market trend is weak as reflected by the decline in prices this week. Spot demand is steady to lower, and inventories are readily available. In the Central, supplies are growing, and production schedules are full. High heat nonfat dry milk market is balanced to fairly tight depending on the locations. Prices are a bit mixed. Dry buttermilk prices are steady to up in the Central and the East, whereas they slid down in the West. Stocks are limited in the East and the Central, but a bit more available in the West. Drying is made on demand in the East. Dry whole milk f.o.b. prices and market conditions are flat. Production increased a bit and spot interest is low. There was a drop in Central and eastern dry whey prices, whereas western prices are reported mixed. The state of the dry whey market is instable in the Central, level in the East, and undergoing pressure in the West. Holdings are available and building in some instances. Production schedules are steady to decreasing. Demand is mostly lackluster. Whey protein concentrate 34% prices and production are stable while inventories remain limited. Contractual loads are moving smoothly. Lactose prices and output are unchanged from last week, and sales are soft. Acid and rennet casein prices are even. Purchasers are reassessing market conditions. Casein production is declining in New Zealand, but increasing in Europe. INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: Early indicators of current milk production in parts of Western Europe identify both: (1) production seasonally increasing; as well as (2) production being higher than at this point last year. EU milk production during January 2019, 12.9 million MT, was 1.4 percent lower than January 2018 according to Eurostat. The January ranking of the United Kingdom as the EU¶s third largest milk producing member state is a reminder of how significant the outcome of the Brexit muddle will be for the UK, the EU, as well as for the global dairy trade. EASTERN OVERVIEW: Poland and Romania are stars in terms of EU milk production during January 2019. Milk production in Poland increased 3.2 percent from January 2018 according to Eucolait. Romania did even better, increasing 6.0 percent. OCEANIA OVERVIEW: AUSTRALIA: Australia¶s growing population, and good demand for milk and dairy products, is expected to result in lower dairy exports over the next year. Making cheese for export is increasingly identified as a favored export dairy emphasis. Cheese is viewed within Australia as a dairy product where Australia has a competitive advantage in its traditional export markets. NEW ZEALAND: February 2019 New Zealand milk production reported by DCANZ was 1.875 million MT, up 0.1 percent from February 2018 milk production, 1.874 million MT. February 2019 milk solids, 165.025 million kg, are down 0.1 percent from February 2018, 165.225 million kg. In Brazil, milk intakes are less than adequate to meet all manufacturing requests. Fluid/UHT milk orders from several private and public market channels remain strong. SOUTH AMERICA OVERVIEW: In Argentina and Uruguay, milk production at the farm level has stagnated and production levels are below last year. With the strong pulls from bottlers, in part due to the opening of schools, milk volumes moving into manufacturing are reported as constricted. In this way, at this point, some processors are manufacturing dairy products exclusively to meet the strong domestic demand, but not for export purposes. NATIONAL RETAIL REPORT (DMN): The most advertised product/category this week is conventional ice cream in 48-64 oz. containers. Ad numbers increased 11 percent. The national weighted average advertised price for conventional milk half gallons is $1.55, compared to $4.33 for organic milk half gallons, an organic price premium of $2.78. Conventional cheese ad numbers decreased 29 percent. The weighted average price for conventional 8 oz shred cheese is $2.14, down 8 cents from last week. Conventional yogurt ad numbers decreased 26 percent. Organic yogurt ads increased more than fivefold but remain a small percentage of conventional yogurt ad numbers. FEBRUARY COLD STORAGE (NASS): On February 28, U.S. cold storage holdings of butter totaled 242.5 million pounds, up 14.8 percent from the previous month, but down 8.7 percent from February 2018. Total American natural cheese holdings totaled 785.6 million pounds, down 2.2 percent from the previous month, but up 3.0 percent from February 2018. Total natural cheese stocks were 1.370 billion pounds, 0.04 percent up from last month and 4.0 percent up from February 2018. FEBRUARY AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $16.80 in February, up $1.50 from February 2018. The alfalfa hay price was $180.00 in February, up $25.00 from February 2018. The corn price was $3.60 in February, up $0.22 from February 2018. The soybean price was $8.52 in February, down $0.98 from February 2018. The milk-feed price ratio was 2.07 in February, up 0.04 point from February 2018. The index of prices received by farmers for dairy products during the month of February 2019 was up 1 point to 83.6. Compared to February 2018, the index was up 7.5 points (9.9 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in February 2019 was up 0.5 point to 109.9. Compared with February 2018, the index was up 0.9 point (0.8 percent). FEBRUARY MARKET AND UTILIZATION SUMMARY (USDA): During February 2019, 12.5 billion pounds of milk were received from Federally pooled producers, 9.2 percent higher than in February 2018. Regulated handlers pooled 3.5 billion pounds of producer milk as Class I, up 11.2 percent compared to the previous year, primarily due to the additional Class I milk pooled by the new California Federal Milk Marketing area. Class I utilization decreased from last year in 7 of the 11 Federal Milk Order Marketing areas. The all-market average Class utilization percentages were: Class I = 28 percent, Class II = 9 percent, Class III = 53 percent, and Class IV = 9 percent. The weighted average statistical uniform price was $15.58 per cwt, up $0.08 from last month and up $1.24 from February 2018. NOTICE -USDA ANNOUNCES AMENDMENT TO CLASS I SKIM MILK PRICE FORMULA: The U.S. Department of Agriculture (USDA) announced March 8, 2019, an amendment to the Class I skim milk price formula under the Federal Milk Marketing Order (FMMO) program, in accordance with the Agriculture Improvement Act of 2018 (2018 Farm Bill). The change is effective May 1, 2019. Currently, the Class I skim milk price is calculated using the higher of the monthly advanced pricing factors for Class III or Class IV skim milk, which reflect dairy product survey prices for the two weeks prior to the price announcement, plus the applicable adjusted Class I differential. Because market prices for these surveyed products fluctuate, the ³higher of“ factor used to determine the Class I skim milk price can change, increasing risk and uncertainty associated with hedging. To address this issue, Congress determined that the formula for the FMMO Class I skim milk price should be the average of the monthly Class III and Class IV advanced pricing factors plus $0.74 per hundredweight plus the applicable adjusted Class I differential. In accordance with the 2018 Farm Bill, the amendment is effective indefinitely, until further modified, and may not be modified sooner than two years after the effective date of this rule. The Federal Register notice is available at https://www.federalregister.gov/documents/2019/03/11/2019-04347/federal-milk- marketing-orders-amending-the-class-i-skim-milk-price-formula Information for the period March 25 - 29, 2019, issued weekly Published by: Dairy Market News - Madison, WI FLORENCE KONE-GONZALEZ, (608)422-8594 Email: Florence.KoneGonzalez@ams.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/