MD_DA560                                                             
DA                                                                   
MD DA560 Dry Whey - Northeast                                        

MADISON, WI.  February 09, 2012 (REPORT 6)                           

DRY WHEY - NORTHEAST                                                 
                                                                     
Dry whey prices declined marginally as the upper end of the range declined on 
contract formulations.  Milk production increases, prompted by the mild winter 
weather, are maintaining increased levels of cheese and dry whey production.  
The market, as one broker stated, "has been spooked recently" with rumors of 
excess supplies and second quarter dry whey futures significantly below the 
current market.  Trade contacts indicate that conventional wisdom suggests 
liquidation of at least some supplies when nearby futures prices are 
significantly below the current market.  Eastern dry whey manufacturers have 
some additional supplies, but are very comfortable with their current 
inventories, especially after 2011's struggles to keep up with contract demands.  
Some loads are showing up in resale offers at prices just under the current 
market.  The uncertain nature of the current market has end users and brokers 
taking a wait and see attitude, wanting a more clear picture of the market prior 
to pursuing additional purchases.  Supplies are moving through contracts with 
limited spot sale activity below contracted prices.  Export demand has softened 
with additional competition coming from Europe and as the U.S. dollar 
strengthened against other currencies.  Dutch prices released this week had 
Edible Grade Whey priced at $0.5595 in U.S. Dollars.  The market undertone is 
steady to weak.  

F.O.B. NORTHEAST:           EXTRA GRADE AND GRADE A:   .7000 - .7650 

1100C rick.whipp@ams.usda.gov