MD_DA950 Dairy Markets at a Glance Report 33 - Released on August 16, 2019 CME GROUP CASH MARKETS (8/16) BUTTER: Grade AA closed at $2.3400. The weekly average for Grade AA is $2.3375 (+.0060). CHEESE: Barrels closed at $1.7650 and 40# blocks at $1.8800. The weekly average for barrels is $1.7440 (+.0360) and blocks, $1.8800 (+.0140). NONFAT DRY MILK: Grade A closed at $1.0300. The weekly average for Grade A is $1.0270 (+.0030). DRY WHEY: Extra grade dry whey closed at $.3650. The weekly average for dry whey is $.3620 (+.0130). CHEESE HIGHLIGHTS: Cheese market sentiment remains positive this week. CME cheddar block prices are nearing a point ($1.90) they have not reached since November 2016. Even with the higher market prices, cheese demand is strong in the Midwest and East. Schools returning from summer have added to food service purchasing. Spot milk prices in the Midwest ranged from $.50 under to $1.50 over Class. Some cheesemakers in that region reported seeing a little extra milk come online. Spot milk prices have begun to fall closer in line with historical spot milk prices during the 33rd week of the year. Nonetheless, cheese producers in the Midwest and West reported using nonfat dry milk to fortify this week. Cheese stocks are available, but they are not at the daunting levels of previous years. BUTTER HIGHLIGHTS: With the reopening of most schools soon, Class I milk standardization is very active across the nation, resulting in increased cream volumes available to churners. In some processing plants, the microfixing output process has been considerably reduced. Bulk/print requests from retailers, wholesalers, and the food service sector vary in each region of the country. This week, bulk butter pricing varies among the regions: East, 5.0 cents to 8.0 cents over the market; Central, 2.0 to 3.0 cents above the market; West, 1.0 cents to 7.5 cents over the market, with various periods and averages used. FLUID MILK: Heat and humidity continue to play their part in keeping farm milk production lower throughout the East and parts of the Central region. In the Midwest and in a large swath of the Western region, milk output has increased with milder summer temperatures. Class I requests have picked up in most of the nation, as schools have begun to reopen their doors. Cheesemakers are finding milk at $.50 under to $1.50 over Class this week. Moderate/fair amounts of condensed skim milk continue clearing into Class IV. Cream availability is mixed across the country. Ice cream production, in some areas, has eased, but Western contacts suggest ice cream makers are still taking their significative share of cream in the region. Cream multiples are 1.30-1.45 in the East, 1.28-1.40 in the Midwest, and 1.16-1.32 in the West. DRY PRODUCTS: Low/medium and high heat nonfat dry milk (NDM) prices are mostly steady across the country. NDM markets are somewhat unsettled, while trading has been quiet this week. The Central/East dry buttermilk prices are mixed, while prices were steady in the West. Dry buttermilk stocks are tighter nationwide. Dry whole milk prices saw a lift on the top of the range, as spot trading continues to trend lighter. Dry whey prices are mostly unchanged in the Central and West regions. However, prices are steady to lower in the Northeast. Spot demand was generally sluggish in dry whey markets. Lactose prices were steady on the range, but mixed on the mostly price series. Undoubtedly, swine flu in the Asian markets is continuing to hinder export lactose markets. Whey protein concentrate 34% (WPC 34%) prices are steady upon quiet trading this week. Buyers are waiting out market conditions. INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: The thin margin of the milk production increase over last year through June isn¶t as comforting as many had hoped would be the case when 2019 began. Yes, it is an increase. Yes, European Commission projections expect the perecentage margin to increase further by the end of 2019. EASTERN: Belarus has reported mixed dairy export results January ± June 2019 compared with January ± June 2018, according to Eucolait: butter, 35,476 MT, -10.7 percent; cheese, 115,316 MT, +18.5 percent; and SMP, 57,817 MT, +35.2 percent. OCEAINIA OVERVIEW: AUSTRALIA: In Northern Australia there is a limited amount of hay available from the region, even new season hay. This has resulted in hay from Southern Australia moving into the region. New planting has lagged so far. Many producers are concerned that obtaining good quality hay will be difficult as the season progresses. NEW ZEALAND: Even with relatively low early milk season volumes, dairy manufacturing is moving ahead with gusto, better than had been expected. Other dairy observers note that during late summer it is not so uncommon for the rise in production to catch buyers off guard as to the magnitude and pace of increase. SOUTH AMERICA OVERVIEW: Farm milk production in the Southern Cone region of South America has improved lately, principally because cooler temperatures have increased productive yields of dairy herds. On the other hand, in a few dairy basins of Argentina, wintry temperatures and poor-quality winter pastures, continue hampering milk output. NATIONAL RETAIL REPORT (DMN): Conventional dairy ad numbers declined 8 percent this week. Organic dairy ad numbers increased 1 percent. There are nearly ten times more conventional dairy ads than organic dairy ads. The national weighted average advertised price for conventional milk half gallons is $2.01, compared to $4.09 for organic milk half gallons, an organic price premium of $2.08. Conventional cheese ad numbers decreased 5 percent. Organic cheese ad numbers increased 268 percent. The weighted average price for conventional 8 oz. shred cheese is $2.35. Conventional yogurt ad numbers decreased 26 percent. Organic yogurt ads increased 46 percent. AUGUST SUPPLY AND ESTIMATES (USDA,WAOB): The milk production forecasts for 2019 and 2020 are reduced from last month on expectations of a smaller dairy herd and slower growth in milk per cow. For 2019, the fat basis import forecast is raised from last month on strong demand for imported butter, while the fat basis export forecast is reduced slightly. The skim-solid basis import forecast for 2019 is raised on higher imports of milk protein concentrates and other dairy products. The 2019 skim-solids basis export forecast is reduced primarily on weaker-than-expected sales of nonfat dry milk (NDM). For 2020, the fat basis import forecast is raised on continued strong import demand for butter, while the fat basis export forecast is reduced on slowing sales of butterfat. JULY CONSUMER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food category is 258.3, up 1.8 percent from 2018. The dairy products index is 217.6, up 0.9 percent from a year ago. The following are the July 2018 to July 2019 changes for selected products: fresh whole milk is +2.9 percent; cheese, -0.9 percent; and butter, +0.3 percent. JUNE MILK SALES (FMMO,CDFA): 3.4 billion pounds of packaged fluid milk products were shipped by milk handlers in June 2019. This was 4.1 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 4.2 percent from June 2018 and estimated sales of total organic fluid milk products decreased 2.5 percent from a year earlier. Information for the period August 12 - 16, 2019, issued weekly Published by: Dairy Market News - Madison, WI ANGEL TERAN-RAMOS, 6084228593 Email: angel.teran@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