MD_DA950 Dairy Markets at a Glance Report 10 - Released on March 8, 2019 March 8, 2019 MADISON, WI (REPORT 10) CME GROUP CASH MARKETS (3/8) BUTTER: Grade AA closed at $2.2675. The weekly average for Grade AA is $2.2835 (+.0145). CHEESE: Barrels closed at $1.3650 and 40# blocks at $1.5350. The weekly average for barrels is $1.4205 (+.0105) and blocks, $1.5615 (-.0460). NONFAT DRY MILK: Grade A closed at $.9750. The weekly average for Grade A is $.9775 (-.0095). DRY WHEY: Extra grade dry whey closed at $0.3400. The weekly average for dry whey is $0.3485 (-.0025). BUTTER HIGHLIGHTS: Despite the unsteady weather and bad road conditions in some parts of the country, milk/cream shipments were minimally affected. In this way, butter production has remained quite active during the week, as vast volumes of butterfat continue to flow into churns. Several processors continue to stockpile inventories into cold storage, preparing for the anticipated high demand during the spring and summer. 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. CHEESE HIGHLIGHTS: There were some reports of strengthened demand from Western contacts, while a number of Midwestern cheesemakers are experiencing seasonal lulls in ordering. Milk is readily available across the nation. Spring flush related milk increases in the West are keeping plants at full capacity, and cheesemakers there are selling milk into other manufacturing outlets when suitable. Midwestern spot milk prices ranged from $.50 to $2 under Class. That said, cheesemakers in the Midwest, in some cases, have scaled production back in order to curb inventories. In the East, plentiful milk is keeping cheese production steady to strong. Market momentum from late January/early February, when averages saw some sharp weekly rises, has settled somewhat. Even still, current prices have some buyers more actively making forward purchases in lieu of current/near term ordering. FLUID MILK: Winter weather in the Midwest, from Iowa up to Minnesota in particular, has continued to play havoc with dairy farms, truckers, and processors in the region. On days last week, a number of trucks either did not reach the farms for pickups or did not reach destinations with milk onboard. Dairy barns have also collapsed on multiple farms, due to heavy snow packs. Eastern cold spells have not created as many disruptions, as milk yields increase in the region. Western milk output, in some cases, is level. More often, however, milk production is on the rise. Milk is generally available for all uses nationwide, with the weather-related delays as the exceptions. Bottling reports range across the country and intra-regionally as well. There is a general sense that bottled milk declines are going to continue. Cheese production is mostly active, although some Western and Midwestern Class III producers are slimming production schedules, as inventories remain long nationally. Cream is available generally. Butter churners remain active, while cream cheese and ice cream producers are starting to gain some production momentum ahead of spring and summer demand upticks. F.O.B. cream multiples are 1.07-1.20 in the East, 1.12-1.20 in the Midwest, and 1.00-1.17 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices were slightly lower in all regions. Buyers and sellers are viewing the markets differently in some cases. As bids are falling into the mid $.90s, some producers are not willing to negotiate anything lower than at or around $1. High heat NDM prices were steady in the Central and East, while shifting lower in the West. Inventories in the West are slightly higher than earlier in the year. Dry buttermilk prices are steady nationwide. Dry buttermilk production activity and inventories have increased with heavier churn activity of late. Dry whole milk prices held steady, as well, although domestic prices are still above those of global whole milk powder prices. Dry whey prices are mixed in the Central and Western regions, while unchanged to lower in the East. Spot market activity was somewhat quiet nationally, while buyers are hesitant to take on extra loads in an uncertain market. Whey protein concentrate (WPC) 34% prices are steady this week. As is the normal for WPC 34%, spot prices run the gamut from the low end to the high, interspersed throughout, depending upon buyer specifications. Lactose prices increased on the bottom of the range, while holding steady elsewhere. Similar to other dry products, lactose buyers are hesitant to take on extra loads currently. Rennet casein prices are mixed, firming at the top while slipping on the bottom. Acid casein prices increased. ORGANIC DAIRY MARKET NEWS: New England Organic Milk Sales and Sourcing. Federal Milk Market Order 1 in New England reports utilization of types of organic milk by pool plants. During January 2019, organic whole milk utilization totaled 15.2 million pounds, down from 16.5 million pounds one year earlier, (-7.9 percent). The January 2019 butterfat content was 3.28 percent, slightly lower from 3.29 percent in 2018. Organic reduced fat milk utilization for January this year, nearly 19.6 million pounds, was down from 22.5 million pounds one year earlier, (-13.2 percent). Meanwhile, butterfat content was 1.35 percent, up from 1.31 percent last year. U.S. Organic Milk Pay Prices. The March 2019 farm gate organic milk pay price is $29.24, with a twelve-month average price of $31.30, based on a 12.9 percent representation of total solids. The organic pay price is the amount accepted by those organic dairy producers who contract with a large national organic cooperative, while based on the geographic area where the organic milk is produced and whether it is organic grassmilk. In the current survey, organic retail ads decreased by 4 percent. Sour cream in 8 oz block packages reported the largest percentage shift in organic ads, at 232 percent. The Southeast region has the largest percentage change for advertisements in the United States this period, at 240 percent. For organic milk, half gallon packages revealed the biggest number of ads currently. Prices for organic milk in half gallon packages shifted down 39 cents compared to the last survey period. The current retail milk price spread between organic and conventional half gallon milk is an organic premium of $1.22. The price spread moved down $0.47 compared to the previous retail survey. NATIONAL RETAIL REPORT (DMN): Conventional ice cream in 48-64 oz. containers is the most advertised product/category this week, with ad numbers decreasing 33 percent. The national weighted average advertised price for conventional milk half gallons is $2.39, compared to $3.61 for organic milk half gallons, an organic price premium of $1.22. Conventional cheese ad numbers decreased 17 percent. There are no ads for organic cheese. The weighted average price for conventional yogurt in 4 to 6 oz. containers, $0.49, is up 3 cents from last week. Organic 4-6 oz. yogurt averages $1.32, an 83 cent organic price premium. JANUARY COLD STORAGE (NASS): On January 31, U.S. cold storage holdings of butter totaled 211.1 million pounds, up 18 percent from the previous month, but down 7 percent from January 2018. Total American natural cheese holdings totaled 805.3 million pounds, up 1 percent from the previous month and up 9 percent from January 2018. Total natural cheese stocks were 1.360 billion pounds, 1 percent up from last month and 6 percent up from January 2018. JANUARY MILK COW INVENTORY SUMMARY (USDA, NASS): The number of milk cows in the United States as of January 1, 2019, totaled 9.35 million head, down 1 percent from the previous year. Milk cow replacement heifers totaled 4.70 million head, down 1 percent from the previous year. The percentage of milk cow replacement heifers per 1,000 milk cows on January 1, 2019 was 50.3, down 1 percent from the previous year. Milk cow replacement heifers expected to calve during the year totaled 3.01 million head, down 1 percent from the previous year. Information for the period March 4 - 8, 2019, issued weekly Published by: Dairy Market News - Madison, WI ISRAEL WEBER, 608-422-8601 Email: israel.weber@ams.usda.gov Additional Dairy Market News Information: Dairy Market News (DMN) by Phone: (608)422-8602 DMN Website: http://www.ams.usda.gov/market-news/dairy DMN Database Portal: http://www.marketnews.usda.gov/mnp/da-home