MD_DA950

     Dairy Markets at a Glance

     Report 37 - Released on September 13, 2019

     CME GROUP CASH MARKETS (9/13)
     BUTTER: Grade AA closed at $2.2225. The weekly average for Grade AA is $2.2120 (+.0189).
     CHEESE: Barrels closed at $1.9200 and 40# blocks at $2.2050. The weekly average for barrels
     is $1.8480 (+.1105) and blocks, $2.0990 (+.1290).
     NONFAT DRY MILK: Grade A closed at $1.0550. The weekly average for Grade A is $1.0460
     (-.0009).
     DRY WHEY: Extra grade dry whey closed at $.3975. The weekly average for dry whey is $.3890
     (-.0035).
          CHEESE HIGHLIGHTS: Although cheese market prices are reminiscent of those of 2014,
     market participants continue to relay positive demand notes. School and college orders have
     reinvigorated cheese producers on the food service side. Pizza cheesemakers are reporting
     seasonal increases in orders, also aided by school orders. Milk is tighter in the Midwest,
     but more available in the Northeast and Western regions. Spot milk prices ranged from $.50
     under to $1.75 over Class; those are comparable to the previous two years. Cheese inventory
     reports are mixed, and production is generally active throughout the nation. Cheese market
     prices have soared. Prices are at points not seen since the most bullish year on dairy
     markets this decade, 2014. Contacts offer various viewpoints on the factors causing the
     increase, but most were not expecting such an abrupt bullish move.
          BUTTER HIGHLIGHTS: Cream supplies moving into churns are becoming slightly tight in the
     East, but are readily accessible in the Central and West regions. In this way, butter
     manufacturing is somewhat mixed across the country. Currently, the demand for butter varies
     in each region of the nation, but in general, is expected to improve ahead of the upcoming
     fall/winter processing needs. This week, bulk butter pricing varies among the regions: East,
     5.0 cents to 8.0 cents over the market; Central, 1.5 to 0.6 cents above the market; West,
     0.0 cents to 7.5 cents over the market, with various periods and averages used.
          FLUID MILK: Throughout most parts of the U.S., milk output is steady to a bit down.
     There is so much milk in Idaho, Utah and Colorado that processing plants are running at full
     capacities. In addition, discounted Class IV loads are available at $4.75 under.
     Nationwide, Class I milk demand is steady to up with schools being back in session after the
     Labor Day holiday. Class II milk supplies are plentiful at some western localities.
     Midwestern cheese makers are not getting as much milk as they were last week. In Florida,
     bottling plants that were closed during hurricane Dorian have now reopened. While some milk
     loads from the Southeast are moving to other regions of the U.S. to fill pressing needs,
     several loads of Midwest milk are also moving to the Southeast to help meet processing
     obligations in the aftermath of the hurricane. Cream supplies have tightened up in the East,
     but they are readily available in the Midwest and the West. Some loads are transferring from
     the West to the Midwest as Midwestern butter processors find favorable prices. Cream
     multiples have increased in the East, leading some processors to sell their cream in lieu of
     churning. The condensed milk market tone is steady in the East and West.
          DRY PRODUCTS: The prices for low/medium heat nonfat dry milk declined in the East and
     Central, but are mixed in the West. While production is active in the Central and West, it
     is steady to down in the East. Supplies are available in all the regions, whereas sales are
     flat to lower in the Central, but mixed in the West. High heat nonfat dry milk prices are
     lower at the bottom of the range in the nation, while staying steady at the top. In the
     Central, inventories are a bit up, and buyers are taking advantage of lower prices.
     Production is generally irregular. Contractual needs are driving dry buttermilk production
     in the Central and East. The market tone is stable in the Central and West and expected to
     strengthen during the fall baking season in the East. Prices are unchanged in the West, but
     mixed in other regions. Stocks are balanced to light depending on the location. Whole milk
     powder prices are stable to increasing in the nation. Inventories are limited, and
     production is based on the needs of committed customers. The interest of bakers and cocoa
     mix manufacturers is anticipated to improve during the fall and winter. Dry whey prices are
     mostly unchanged in a quiet market. Sales are slow, whereas stocks are available to satisfy
     all requests. Production is steady, but could rise if higher protein concentrates processors
     shift their production focus to dry whey. Whey protein concentrate 34% contractual sales
     are enough to keep inventories under control. Outputs are currently flat. This week, prices
     have remained the same compared to the previous week. Lactose spot requests are slow to
     develop, leading to a growth in supplies. Processors are doing what is necessary to keep

     supplies in check. Prices are stable, but the market is generally weak. Acid and rennet
     casein prices are steady. However, the expectation is that New Zealand casein prices will
     remain flat until the September/October peak production season.
          INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: German milk production
     through much of August was above the previous August, according to ZMB early reporting.
     However, by the end of August, another hot spell led to lower production and likely lower
     production for the month once official data is released. Milk production in the first week
     of September is reported to have returned to expected levels. Even with the periods of
     extreme heat in recent months that impacted production in Germany, France, and some other
     countries, a factor helping EU production is farmgate milk prices. Western European cheese
     production remains below levels previously planned. German cheese manufacturers attribute
     this to lower than expected milk production earlier in 2019, as well as competing demand
     from other dairy product manufacturing, for more recent milk production. EASTERN: Poland¶s
     milk production January ± July this year was 2.1 percent higher than last year, according
     the CLAL data made available to USDA. Cheese production was 0.7 percent higher. The Czech
     Republic reports January ± July milk production 0.8 percent higher than last year. Butter
     production was 11.2 percent higher.
          OCEANIA OVERVIEW: NEW ZEALAND: New Zealand dairy manufacturing output is still very
     seasonally low. This leads most observers to not expect much to change in expectations for
     the season until final September or October production data becomes available. New Zealand
     seasonal milk production typically peaks in early October. It is spring in New Zealand. Even
     so, it has been cool, with snow in some remote areas. That is not likely to impact the
     overall seasonal results because pastures are in good shape.
          SOUTH AMERICA OVERVIEW: Across South America, especially in the Southern Cone region,
     milk production on farms continues to improve as the continent transitions from winter to
     spring season. Thus, temperatures are becoming more pleasant to dairy herds, supporting the
     cows¶ productive yields. In this fashion, milk shipments into cheese, milk caramel, yogurt,
     and fluid manufacturing plants are more than adequate as demands within the dairy industry
     and food processing sector remain hearty. Butterfat volumes are steadily improving along
     with seasonal patterns. Having said this, butter production is ongoing with fair/good
     interest from the wholesale and retail sectors. Bottled/UHT milk pulls from several
     educational institutions and some public food aid programs are fair/good. Cheese production,
     especially mozzarella, is very active with strong interest from restaurants and pizzerias.
          NATIONAL RETAIL REPORT (DMN): This week, ice cream in 48 to 64 oz containers returned
     as the most advertised dairy item in the United States. Dairy advertisements, both
     conventional and organic, decreased week over week. The national weighted average advertised
     price for conventional milk half gallons is $2.65, compared to $3.88 for organic milk half
     gallons, an organic price premium of $1.23. Conventional cheese ad numbers decreased 6
     percent. The weighted average price for conventional 8 oz shred cheese is $2.28, down 3
     cents from last week. Conventional yogurt ad numbers decreased 14 percent. Organic yogurt
     ads decreased 67 percent.
          AUGUST CONSUMER PRICE INDEX AND PRODUCER PRICE INDEX (BLS): The Consumer Price Index
     (CPI) for the all food category is 258.4, up 1.7 percent from 2018. The dairy products
     index is 218.8, up 1.1 percent from a year ago. The following are the August 2018 to August
     2019 changes for selected products: fresh whole milk is +2.3 percent; cheese, +0.1 percent;
     and butter, +1.4 percent.
          In August 2019, the Producer Price Index (PPI) for the all food manufacturing is
     202.2, up 2.3 percent from 2018. The PPI index for manufactured dairy products is 206.5, up
     5.8 percent from a year ago. The following are the August 2018 to August 2019 changes for
     selected products: fresh whole milk is +10.7 percent; cheese, +6.2 percent; butter, -0.5
     percent; and dry milk products and mixtures, up 10.2 percent.
          JULY MILK SALES (FMMO,CDFA): 3.6 billion pounds of packaged fluid milk products were
     shipped by milk handlers in July 2019. This was 0.2 percent higher than a year earlier.
     Estimated sales of total conventional fluid milk products decreased 0.1 percent from July
     2018 and estimated sales of total organic fluid milk products increased 4.6 percent from a
     year earlier.
          SEPTEMBER SUPPLY AND DEMAND ESTIMATES (USDA,WAOB): The milk production forecast for
     2019 is raised as stronger growth in milk per cow more than offsets forecast lower cow
     numbers. For 2020, the milk production forecast is reduced from the previous month on slower
     expected growth in dairy cow numbers; however this is partly offset by slightly higher
     forecast milk per cow. The 2019 and 2020 fat basis import forecasts are lowered on recent
     trade data and expectations of slower butterfat imports. Fat basis export forecasts for
     2019 and 2020 are reduced from last month on weaker expected global demand for U.S.
     butterfat products. The 2019 skim-solids basis import forecast is raised from the previous

     month on higher-than-expected imports of milk protein concentrates and a number of other
     dairy products.

     Information for the period September 9 - 13, 2019, issued weekly

     Published by:
     Dairy Market News - Madison, WI
     FLORENCE KONE-GONZALEZ, (608)422-8594
     Email: florence.konegonzalez@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