MD_DA950 Dairy Markets at a Glance Report 9 - Released on March 1, 2019 CME GROUP CASH MARKETS (3/1) BUTTER: Grade AA closed at $2.2875. The weekly average for Grade AA is $2.2690 (+.0146). CHEESE: Barrels closed at $1.4100 and 40# blocks at $1.6100. The weekly average for barrels is $1.4100 (-.0050) and blocks, $1.6075 (+.0125). NONFAT DRY MILK: Grade A closed at $.9850. The weekly average for Grade A is $.9870 (-.0055). DRY WHEY: Extra grade dry whey closed at $0.3600. The weekly average for dry whey is $0.3510 (-.0028). BUTTER HIGHLIGHTS: Butter production is quite active in all regions of the nation as cream supplies remain very accessible to the churners. Bulk butter inventories continue building into cold storage for later use. In general, demands for print/bulk butter are improving a bit ahead of spring holidays. Bulk butter pricing varies among the regions: East, 5.0 cents to 8.0 cents over the market; Central, 6.0 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 production continues at or near capacity in most of the country. Midwestern and Western cheesemakers are shifting production down whenever possible to limit inventories. Midwestern cheesemakers are hesitant to take on spot milk, and some are selling their own milk back onto the spot market. Also, both Midwestern and Western processors are shifting production varieties in order to control stores of specific varieties. For the second week in a row, spot milk prices ranged from Class III to $2 below Class. Cheese producers in the Central region reported weather related issues with trucking, particularly longer hauls. Demand is mixed generally, but some Midwestern cheese contacts relay higher market prices and typical seasonal slowdowns are teaming up to create slower sales. Cheese market tones remain firm compared to most of the past half-year. FLUID MILK: Cold weather in the Midwest has not changed increased availability of milk for all uses. Eastern and most Western contacts report a similar storyline. However, moderately cold and wet weather in California is creating flat production levels. Elsewhere in the West, a plant closure has led to some reports of milk being discarded. Bottlers in the center of the country are seeing ordering and production slowdowns. Lower cheese production schedules in the West and Midwest are forcing milk handlers to reach out and send milk further down the road in some cases. Ice cream production perked up slightly for the first time this year in the Midwest. That being said, cream availability remains widely available, and butter churners are taking on the majority share at similar prices to last week. F.O.B. cream multiples are 1.07-1.20 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 (NDM) prices were steady to lower in the United States. End users in the Central region are finding economic deals from Western suppliers, who are matching local costs even with additional freight. The high heat NDM price range narrowed in the Central/East, while Western high heat NDM prices are steady to higher. Dry buttermilk prices remained steady in all regions. Dry buttermilk spot load demand is steady in the Central/East regions, while Western trades remain contractually focused. The dry whole milk price range ticked up on the bottom of the range, as increasing demand created busier markets. Additionally, contacts suggest dry whole milk inventories are in balance. U.S. dry whey spot prices are mixed throughout the regions. Some local buyers in the Central are finding deals out West as their supplies are robust. Many Eastern buyers are waiting on executing spot purchases as they analyze the market. Market conditions are steady to soft. Whey protein concentrate WPC34% prices are mixed on the range and mostly series. Stronger prices for higher whey protein concentrations are providing an impetus to make WPC80% in lieu of WPC34%. Lactose prices are unchanged this week. Some processors report there is no lack of demand. However, a few lactose marketers continue to feel price pressures due to weak whey permeate markets. Prices for acid and rennet casein are steady. Buyers are wary of whether this price strength will hold. Purchasing options are further limited for those market participants preferring either New Zealand or EU sourcing. INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: Recent milk production in some of Western Europe, certainly in Germany, is increasing more week to week than at this point in 2018. The most recent two weeks with early reporting data registered increases of 0.4 percent and 0.5 percent. Relatively mild weather has been welcome in this regard. Cheese stocks continue to be reported at a lower than desired level. Manufacturing schedules continue to strain to keep up with demand using available milk. EASTERN: Cheese production in Poland increased 1.9 percent during 2018 according to CLAL. Cheese exports from Poland during 2018 decreased 1.4 percent from 2017. Top destinations included Germany, +10.4 percent; Czech Republic, +21.6 percent; Italy, +7.2 percent; and Slovakia, +3.0 percent. OCEANIA OVERVIEW: AUSTRALIA: Seasonal milk production in Australia through December is 5.1 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. The current state of the Australian dairy industry is one of mostly steady milk prices but elevated costs. This results in less purchased feed, herd reductions, less milk produced, and dire financial stress for many producers. NEW ZEALAND: Dry mid-January into early February weather in parts of New Zealand has returned to more normal precipitation. There is some discussion about the potential that when February milk production data is official, weather may have led to February milk increases being moderated compared with recent months. Most New Zealand dairy producers are feeling good levels of financial confidence about the current season. Pay pries for most producers so far are ahead of break-even levels. This is helping profitability and decreasing financial related stress. SOUTH AMERICA OVERVIEW: During the last couple of weeks, the climate has been favorable, conductive to a slight uptick on milk production in the main dairy basins of Argentina, Paraguay, Uruguay and Brazil. Some meteorologists predict that El Niņo will hit hard again in the coming months, causing floods and droughts across all the continent. Nevertheless, the current climate conditions are more than adequate for the continued development of corn and soybean crops. With most educational institutions reopening, mainly in Argentina and Uruguay, milk requests from bottlers are improving. In Brazil, the economy seems to be stabilizing, while the consumer confidence level is improving with a higher demand for dairy products. NATIONAL RETAIL REPORT (DMN): With spring still several weeks away, conventional ice cream in 48-64 oz. containers is the most advertised product/category this week. The national weighted average advertised price for conventional milk half gallons is $2.31, compared to $4.00 for organic milk half gallons, an organic price premium of $1.69. Conventional cheese ad numbers increased 20 percent. Organic cheese ad numbers declined 13 percent. The weighted average advertised price for conventional Greek yogurt in 4 to 6 oz. containers is $0.96, up 1 cent from last week. DECEMBER 2018 DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 171 million pounds, 0.1 percent below December 2017, but 17.0 percent above November 2018. American type cheese production totaled 425 million pounds, 4.4 percent below December 2017, but 0.6 percent above November 2018. Total cheese output (excluding cottage cheese) was 1.09 billion pounds, 1.2 percent below December 2017, but 1.0 percent above November 2018. Nonfat dry milk production, for human food, totaled 143 million pounds, 13.0 percent below December 2017, but 8.3 percent above November 2018. Dry whey production, for human food, was 73.2 million pounds, 13.3 percent below December 2017, but 0.2 percent above November 2018. Ice cream, regular hard production totaled 43.7 million gallons, 6.1 percent below December 2017, and 12.2 percent below November 2018. JANUARY AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $16.60 in January, up $.50 from January 2018. Milk Cows price was $1,140 in January, down $380 from January 2018. Alfalfa hay price was $181.00 in January, up $28.00 from January 2018. Corn price was $3.56 in January, up $.27 from January 2018. Soybean price was $8.63 in January, down $.67 from January 2018. The milk-feed price ratio was 2.05 in January, down 0.13 from January 2018. The index of prices received by farmers for dairy products during the month of January 2019 was up 1 to 82.6. Compared to January 2018, the index was up 2.5 points (3.1 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in January 2019 was up 0.1 to 109.3. Compared with January 2018, the index was up 1.1 points (+1.0 percent). FEBRUARY CLASS AND COMPONENT PRICES (USDA, FMMO): The following are the February 2019 class prices under the Federal milk order pricing system and changes from the previous month: Class II: $16.13 (+$0.39), Class III: $13.89 (-$0.07), and Class IV: $15.86 (+$0.38). Under the Federal milk order pricing system, the butterfat price for February 2019 is $2.5345 per pound. Thus, the Class II butterfat price is $2.5415 per pound. The protein and other solids prices for February 2019 are $1.1776 and $0.2631 per pound, respectively. These component prices set the Class III skim milk price at $5.20 per cwt. The February 2019 Class IV skim milk price is $7.24, which is derived from the nonfat solids price of $0.8041 per pound. The product price averages for February 2019 are: butter: $2.2644, nonfat dry milk: $0.9800, cheese: $1.3940 and dry whey: $0.4545. SUMMARY OF PACKAGED SALES OF TOTAL FLUID MILK PRODUCTS, 2018 (USDA, FMMO AND CDFA): During 2018, the Federal Milk Order 1, Northeast, annual fluid milk sales reached 7.9 billion pounds. Federal Milk Order 32, Central, annual fluid milk sales recorded was 4.0 billion pounds. Federal Milk Order 51, California, annual fluid milk sales are 5.1 billion pounds. For all orders combined, the total fluid milk sales reported in 2018 was 43.3 billion pounds. Information for the period February 25 - March 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: https://www.ams.usda.gov/market-news/dairy DMN MARS (MyMarketNews): https://mymarketnews.ams.usda.gov/ DMN Database Portal: https://www.marketnews.usda.gov/mnp/da-home