MD_DA950 Dairy Markets at a Glance Report 4 - Released on January 24, 2020 CME GROUP CASH MARKETS (1/24) BUTTER: Grade AA closed at $1.8600. The weekly average for Grade AA is $1.8681(-.0309). CHEESE: Barrels closed at $1.6100 and 40# blocks at $1.9950. The weekly average for barrels is $1.6156 (+.1011) and blocks, $1.9913 (+.0853). NONFAT DRY MILK: Grade A closed at $1.2875. The weekly average for Grade A is $1.2925 (+.0120). DRY WHEY: Extra grade dry whey closed at $.3650. The weekly average for dry whey is $.3613 (-.0002). CHEESE HIGHLIGHTS: Milk into cheese vats remains available for active production rates throughout the country. Prices on the spot milk market ranged from Class III to $1.50 under Class. In comparison, last year's range was $.50 under to $1 over, while the range was larger in 2018: $3 under to $1 over Class III. Cheese barrels are more accessible according to Western contacts, but Midwestern barrel cheese mongers relay steady demand has kept their inventories in check, regionally. They are currently off-loading holiday-produced inventories. Cheese market tones are gaining a little ground after what has been a capricious start to the year, as block prices rolled over $2 this week. That said, the block-over-barrel price gap reached over $.40 last week. Marketers expect the historically large price chasm to diminish. The question remains as to how the price gap shores itself up: whether it be block prices decreasing, barrel prices increasing, or a culmination of the two. Generally, markets are uncertain with both bullish and bearish accents. Prices have moved higher this week overall, but the bearish gap looms. BUTTER HIGHLIGHTS: Across the nation, butter production is very active, driven by large cream volumes available for churning. In some instances, retailers are replenishing stocks following the winter holidays and preparing for the spring holidays. Prompted by lower prices, some bulk butter buyers are laying on coverage for near-term needs, while other end users are feeling pleased with their current holdings. At this point, bulk butter stocks are more than adequate to cover most needs. This week, bulk butter pricing varies by regions: East, 4.0 cents to 7.0 cents over the market; Central, even to 3.00 cents above the market; West, 1.0 cents to 8.0 cents over the market, with various periods and averages used. FLUID MILK: Milk production nationwide is steady to increasing. Relatively tame winter weather is keeping cows comfortable across much of the country, but below normal temperatures have kept milk output in check in Florida. Milk flows are above projections in the Pacific Northwest and mountain states and increasing throughout the West and Midwest. Heavy milk and cream volumes are keeping processors busy. Class I sales are steady to higher as educational institutions settle into regular routines and the remaining colleges return from winter break. Cream supplies are readily available. Multiples for the week are 1.10- 1.20 in the East, 1.15-1.26 in the Midwest, and 1.00-1.18 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk prices are steady to higher in the eastern half of the U.S. and higher in the western half. Condensed skim is easy to locate and production is active. But NDM stocks are highly committed through Q1 and Q2 contracts, which is limiting availability in some spot markets. High heat NDM prices are steady to lower in the Central and East, but steady to higher in the West. The NDM market tone is bullish. Dry buttermilk prices are steady to higher. National dry whole milk prices are mixed. The market tone for edible dry whey is steady to firming and is reflected by market spot prices. Animal feed whey prices are unchanged. Prices for whey protein concentrate 34% are stable to higher, as contracted volumes are pulling steadily at supplies. The lactose price range held steady, but industry contacts say spot prices are trending upwards. Both acid and rennet casein prices strengthened this week. Milk production in the primary producing country, New Zealand, continues a seasonal decline. ORGANIC DAIRY MARKET NEWS: Federal Milk Market Order 1, in New England, reports during November 2019, organic whole milk utilization totaled 16.3 million pounds, up from 15.8 million pounds November 2018. The utilization of organic reduced fat milk for November 2019, 15.9 million pounds, was down from the 18.8 million pounds one year earlier. The December 2019 farm gate organic milk pay price of a national organic dairy cooperative was $32.42, with a twelve-month average price of $31.30, based on 12.9 percent total solids. Sources noted offers for spot loads of organic cheese, nonfat dry milk, butter, and cream in the organic dairy marketplace are sluggish. This survey period, total organic dairy advertisements at retail supermarket outlets increased 25 percent, compared to the previous week. The increase was driven by a 126 percent growth in ad volume for 32 ounce organic yogurt. Comparatively, prices dipped 67 cents, the largest decline of all organic dairy commodities surveyed. The retail milk price spread between organic and conventional half gallon milk represents an organic premium of $1.98, up 68 cents over last week. NATIONAL RETAIL REPORT (DMN): The total number of conventional dairy product advertisements decreased 2 percent, but the total number of organic dairy product ads increased 25 percent. Conventional ice cream in 48 to 64 ounce containers was the most advertised dairy product this week, with a 19 percent increase in ad numbers. Conventional milk ads increased by 66 percent, while organic milk ads increased by 37 percent. Milk in half gallons are the most advertised organic item this week. Total conventional and organic cheese ads decreased 5 percent and 76 percent, respectively. DECEMBER COLD STORAGE (NASS): Total natural cheese stocks in refrigerated warehouses on December 31, 2019 were down 1 percent from the previous month and down 2 percent from December 31, 2018. Butter stocks were up 5 percent from last month and up 6 percent from a year ago. FEBRUARY ADVANCED CLASS PRICES (FMMO): Under the Federal milk order pricing system, the base Class I price for February 2020 is $17.55 per cwt. The base Class I price decreased $1.46 per cwt when compared to the previous month of January 2020. A Class I differential for each order's principle pricing point (county) is added to the base price to determine the Class I Price. The advanced Class IV skim milk pricing factor is $9.54. Thus, the Class II skim milk price for February 2020 is $10.24 per cwt, and the Class II nonfat solids price is $1.1378. The two-week product price averages for February 2020 are: butter $1.9311, nonfat dry milk $1.2388, cheese $1.8081 and dry whey $0.3295. DECEMBER MARKET SUMMARY AND UTILIZATION REPORT (FMMO): During December 11.5 billion pounds of milk were received from Federally pooled producers. This volume of milk is 17.0 percent lower than the December 2018 volume. Regulated handlers pooled 3.8 billion pounds of producer milk as Class I products, down 2.6 percent when compared to the previous year. Class I utilization decreased from last year in 8 of the 11 Federal Milk Order Marketing areas. The all-market average Class utilization percentages were: Class I = 33%, Class II = 13%, Class III = 24%, and Class IV = 30%. The weighted average statistical uniform price was $18.78 per cwt, $0.26 higher than last month and $3.47 higher than last year. DECEMBER MILK PRODUCTION (NASS): Milk production in the 24 major States during December totaled 17.4 billion pounds, up 0.9 percent from December 2018. November revised production at 16.7 billion pounds, was up 0.9 percent from November 2018. The November revision represented an increase of 4 million pounds or less than 0.1 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 1,978 pounds for December, 14 pounds above December 2018. The number of milk cows on farms in the 24 major States was 8.81 million head, 16,000 head more than December 2018, but unchanged from November 2019. Milk production in the United States during the October - December quarter totaled 53.8 billion pounds, up 0.8 percent from the October - December quarter last year. The average number of milk cows in the United States during the quarter was 9.34 million head, 18,000 head more than the July - September quarter, but 22,000 head less than the same period last year. Information for the period January 20 - 24, 2020, issued weekly Published by: Dairy Market News - Madison, WI MIKE BANDLI, (608)422-8592 Email: mike.bandli@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