MD_DA950

     Dairy Markets at a Glance

     Report 5 - Released on February 1, 2019

     CME GROUP CASH MARKETS (2/1)
     BUTTER: Grade AA closed at $2.2900. The weekly average for Grade AA is $2.2835 (+.0535).
     CHEESE: Barrels closed at $1.3000 and 40# blocks at $1.5000. The weekly average for barrels
     is $1.2755 (+.1061) and blocks, $1.4610 (+.0785).
     NONFAT DRY MILK: Grade A closed at $1.0025. The weekly average for Grade A is $1.0095
     (+.0032).
     DRY WHEY: Extra grade dry whey closed at $0.3625. The weekly average for dry whey is
     $0.3885 (-.0378).
          BUTTER HIGHLIGHTS: The polar vortex, which caused extreme cold weather during this
     week, especially in the Midwest and East, has not stopped the active production of butter in
     these regions of the country. However, some hauling issues were reported, such as delays in
     the delivery of print/bulk butter to wholesalers, retailers and food service. There were
     also some slowdowns on milk/cream shipments from dairy operations to manufacturing plants.
     Meanwhile, in the West, butter churning remains strong, adding to the pile of post-holiday
     stocks. In general, the national demand for butter is seasonally steady. 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, 2.0 cents to 7.5 cents over the market, with various
     periods and averages used.
          CHEESE HIGHLIGHTS: Cheese market upturns this week have provided some relief to
     cheesemakers in all regions. While the CME block to barrel cheese spread remains large and
     concerning, both block and barrel prices have made marked gains. Contacts in the West
     acknowledge heavy inventories, and they are preparing to accept current conditions as the
     new norm. Weather has created some minor hiccups, but cheese plant managers relayed only
     minor issues as contingencies were in place in most cases. Bottling plant closures due to
     weather/maintenance pushed some milk into Class III production at larger discounts than in
     recent weeks. Spot milk prices were reported from $2.75 under to $.50 over Class.
     Production, therefore, has been steady. Pizza style cheese orders have been strong early in
     2019, as is seasonally expected.
          FLUID MILK: Extreme winter weather through the Midwest and Northeast has caused some
     hauling delays and plant closures, but most contacts suggest contingency plans were in place
     and disturbances were minimal. That said, some Midwestern farmers are concerned about the
     temperature hikes coming into the weekend. Pneumonia and other cow health issues are
     expected. All said, milk production has been generally steady to strong. Western milk output
     reports point to a generally steady balance. Midwestern contacts suggest bottling plant
     closures, due to weather related maintenance issues, pushed more milk into Class III
     production. Current cream supplies are available nationwide, and some butter manufacturers
     are clearing plentiful quantities in order to prepare for upcoming seasonal demand
     increases. F.O.B. cream multiples are 1.05-1.25 in the East, 1.10-1.21 in the Midwest, and
     1.00-1.17 in the West.
          DRY PRODUCTS: Low/medium heat nonfat dry milk spot prices are stable to somewhat mixed
     in the country. Many sellers report that buyers are responsive to current prices. Some dairy
     contacts are trying to figure out the future direction of the market. Current market
     conditions are steady to a bit bullish. High heat nonfat dry milk prices are mixed. Spot
     trades are intermittent, yet the demand is steady to strong. The market tone is steady to
     balanced. Dry buttermilk prices are mostly higher in the United States this week. The demand
     is steady to mixed. There are reports of demand increasing soon because of the approaching
     baking season. Market conditions are steady to strengthening. Dry whole milk prices are
     unchanged. Interest from hot chocolate mix makers remains strong as winter is at its height.
     Dry whey prices are mixed in the U.S. There are reports of the market dividing within
     itself. Some buyers are trying to determine current market conditions. Animal feed whey
     buyers have started to pick up activity. Whey protein concentrate WPC34% spot prices are
     unchanged on the range, but slightly increased on the bottom of the mostly series. The
     demand for specific WPC34% that meets infant formula requirements is solid. WPC34% that is
     interchangeable does not have the same market energy. The majority of lactose prices are
     unchanged, however prices shifted down on the bottom of the range this week. Some
     manufacturers are setting up Q2 contract negotiations. Buyers are willing to move forward to
     assure coverage. Casein prices are steady currently. Some buyers who do not have immediate
     needs are being cautious and price sensitive.

          INTERNATIONAL DAIRY MARKET NEWS: AUSTRAILIA: Weather is not giving any relief to
     depressed milk production in Australia. Heat continues to be a very serious problem starting
     2019. Peak temperatures in some inland areas this week hit 115 degrees Fahrenheit. Feed is
     getting harder to find, poorer quality, and more expensive. Some dairy producers are having
     great difficulty getting enough water to cows. Cows are literally dying. It is a very sad
     and painful situation. The recovery timetable is uncertain. Seasonal milk production in
     Australia through November is 4.8 percent lower than last year. The states of South
     Australia and Tasmania are up, but the other four states, which account for the bulk of milk
     production, are lower.
          NEW ZEALAND: New Zealand is approaching a four to six week period when the final
     outcome of the milk production season will be essentially determined. The very good seasonal
     increases so far are not expected to slip much. Barring unexpected weather, the point of
     reasonable seasonal certainty is drawing closer. Parts of each island reached inland highs
     in the mid 80s Fahrenheit. Many coastal areas are slightly cooler. This is tolerable weather
     for late January in New Zealand. There has been light rain over much of the country.
          EUROPEAN DAIRY MARKET OVERVIEW: WESTERN: It seems likely that final 2018 results will
     not measure up to early 2018 expectations for EU milk production increases. EU milk
     production through November 2018 was 1.0 percent higher than 2017 according to Eurostat.
     November 2018 production was 0.7 percent lower than November 2017. Many European dairy
     manufacturing representatives are away from offices and in Brussels this week for meetings
     of a European dairy association. While these meetings are always filled with transactional
     activity, advanced consideration of the consequences of a no deal Brexit are actively under
     discussion. The consensus of many dairy officials is that the more open and unrestricted the
     flow of dairy products is between Great Britain and the EU, the better.
          EASTERN: Poland continues to be a strong performer in the EU dairy industry. It is the
     sixth largest EU milk producer and the largest in Eastern Europe. November 2018 production
     was 3.0 percent greater than November 2017. January-November 2018 was 2.5 percent greater
     than the prior year. Poland is number 5 in EU cheese production, narrowly trailing
     Netherlands.
          SOUTH AMERICAN OVERVIEW: The main dairy producing countries in South America are
     suffering some effects of the El Niņo phenomenon, such as heavy rains. Although these
     atmospheric effects had not been catastrophic, they are still harming the continental dairy
     industry, especially the dairy farmers. That said, the humidity conditions in several dairy
     basins in Argentina and Uruguay continue to hamper milk yields. On the contrary, the
     production of farm milk continues to improve in Brazil. Manufacturing of cheese, butter and
     yogurt are active. However, the general consumption of dairy products in the continent is
     slow, according to several industry contacts. In contrast, international interest,
     especially from Algeria, remains strong.
          NATIONAL RETAIL REPORT (DMN): Ad numbers for conventional 16 oz sour cream increased
     47 percent. The weighted average advertised price, $1.75, increased 10 cents from last
     week. The national weighted average advertised price for conventional milk half gallons is
     $2.46, compared to $3.63 for organic milk half gallons, an organic price premium of $1.17.
     Ad numbers for conventional 8 oz block cheese, the single most advertised category/size,
     increased 42 percent, with a weighted average advertised price of $2.05, down 23 cents. The
     weighted average advertised price for conventional Greek yogurt in 4 to 6 oz. containers is
     $0.96, up 2 cents from last week.
          NOVEMBER AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers
     was $17.00 in November, down $1.20 from November 2017. The alfalfa hay price was $175.00 in
     November, up $25.00 from November 2017. The corn price was $3.41 in November, up $0.26 from
     November 2017. The soybean price was $8.37 in November, down $0.85 from November 2017. The
     milk-feed price ratio was 2.18 in November, down 0.36 from November 2017. The index of
     prices received by farmers for dairy products during the month of November 2018 was down 2
     to 84.6 Compared to November 2017, the index was down 5.9 points (-6.5 percent). The index
     of prices paid by farmers for commodities and services, interest, taxes, and wage rates in
     November 2018 was down 0.4 points to 109.0. Compared with November 2017, the index was up
     1.9 points (1.8 percent).
          JANUARY CLASS AND COMPONENT PRICES (USDA, FMMO): The following are the January 2019
     class prices under the Federal milk order pricing system and changes from the previous
     month: Class II: $15.74 (+$0.07), Class III: $13.96 (+$0.18), and Class IV:  $15.48
     (+$0.39). Under the Federal milk order pricing system, the butterfat price for January 2019
      is $2.4981 per pound. Thus, the Class II butterfat price is $2.5051 per pound. The protein
     and other solids prices for January 2019 are $1.1927 and $0.2898 per pound, respectively.
     These component prices set the Class III skim milk price at $5.41 per cwt. The January 2019
      Class IV skim milk price is $6.98, which is derived from the nonfat solids price of

     $0.7757 per pound.  The product price averages for January 2019 are: butter: $2.2343,
     nonfat dry milk: $0.9513, cheese: $1.3868 and dry whey: $0.4805.

     Information for the period January 28 -  February 1, 2019, issued weekly

     Published by:
     Dairy Market News - Madison, WI
     JESSICA MUELLER, 608-422-8589
     Email: Jessica.Mueller@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