MD_DA950 DY, DAIRY MD DA950 NATIONAL DAIRY MARKET AT A GLANCE May 17, 2013 MADISON, WI (REPORT 20) CME GROUP CASH MARKETS (5/17): BUTTER: Grade AA closed at $1.6150. The weekly average for Grade AA is $1.6015 (-.0265). CHEESE: Barrels closed at $1.7600 and 40# blocks at $1.7700. The weekly average for barrels is $1.7380 (+.0080) and blocks, $1.7745 (-.0950). BUTTER HIGHLIGHTS: Retail demand for butter is slow to restart in some areas. Some grocery and convenience stores are running ads to help push print butter into consumers' hands. Sale prices on 1 pound packages range from $1.79 to $3.91 throughout the country. Orders from food service firms catering to education institution accounts are transitioning toward lighter summer ordering patterns. Butter production is seasonally active, but competition for cream is emerging strongly from frozen dessert/ice cream manufacturers. Trading at the CME was intermittent from day to day, totaling 7 cars for the week. Grade AA butter prices at the CME Group site declined early in the week, then rebounded from Wednesday to Friday to post a net one-half cent weekly price increase. CHEESE HIGHLIGHTS: Cheese prices were mixed again this week. The price differential between blocks and barrels returned to a more typical spread after weeks of widely divergent prices. Block prices had traded at as much as 23 cents higher than barrel prices. Export demand for blocks had helped push prices higher while barrels faced lower demand. A combination of lower export demand and anticipated increasing production for the near term brought block prices back in line with the more typical difference between blocks and barrels. Cheese plants are running busy schedules as milk supplies are available for Class III manufacturing. Cheese inventories are above year ago levels, but are not considered burdensome. Export interest continues to clear some volumes, but has slowed against higher prices. Retail demand is moderate as consumers look for specials to make extra purchases. Process cheese demand is reported to be lighter as consumers wait for the grilling season to arrive. Spot trading at the CME Group this week was mixed, with barrels firming through the week and blocks showing weakness. Sales at the exchange were active as buyers and sellers looked to take advantage of price movement. FLUID MILK: Milk production levels around the country are trending both higher and lower. Southern regions are mostly past their peak production, while many Northern areas are trending towards their Spring flush. Increases in Class I demand in Florida have reduced shipments of milk out of the region. North Central areas of the country are experiencing a later than typical flush and are still building supplies. The Southwest and California report mostly steady production. Weather conditions across the country have been favorable to increased cow comfort levels. Processing plants around the country are busy manufacturing various dairy products. Class I demand is slowing as more schools are ending their Spring terms. Cream multiples are mostly steady with some discounting for out of region sales. Class II demand is increasing, albeit slower than expected, as warmer weather has been slow to arrive in parts of the country. DRY PRODUCTS: Low/medium heat nonfat dry milk prices are lower. Market participants report buyers are becoming increasingly price sensitive. Many buyers have coverage for immediate needs and are willing to be patient on additional orders. NDM production levels are mixed, depending on available milk supplies. Manufacturers are content in most cases to build inventory for future needs. Increasing production of SMP for export markets have added to some uncertainty over NDM supplies. High heat NDM prices are mixed with manufacturers concentrating on low/medium heat production. Dry buttermilk prices are mostly steady to higher with a firm undertone. Increased demand for condensed buttermilk into Class II facilities has slowed production of dry buttermilk. Dry whey prices and the market undertone are uneven. Export demand is variable and some prices for that market segment have firmed. Whey supplies are in balance for demand with product available from both manufacturers and brokers. Whey protein concentrate 34% prices are higher. Blenders are noting the lower price advantage for WPC34% as a source of protein than some alternatives. Lactose prices are steady. Demand is uneven with variable prices depending on quality and mesh size. Casein prices are firm with concerns over future availability being expressed. ORGANIC DAIRY MARKET NEWS (DMN): The national weighted average advertised price of organic milk half gallons, $3.56, is 3 cents lower than two weeks ago. The price range is $2.79 to $4.69. One year ago the average price was $3.38. The organic- conventional half gallon price spread is $2.68, compared to $1.38 two weeks ago. The national weighted average conventional milk price for half gallons, $0.88, was down $1.33 from two weeks ago. There was very limited featuring of this commodity category, only appearing in 64 ads, compared to 2,033 ads two weeks ago. The spread is the highest this year. About 46% of organic yogurt ads are for Greek yogurt in 4-6 ounce containers, with a weighted average advertised price of $1.00, unchanged from last year's average price. About 29% of organic yogurt ads are for 4-6 ounce containers, with a weighted average advertised price of $1.00. Last year the average price was $.74. Organic yogurt in 32 ounce containers accounts for 25% of ads, with an average price of $3.00. Last year the average price was $2.79. Weather conditions in the Northeast region of the nation have been conducive for fieldwork activities. Corn, for silage, plantings in New England are 40% completed and significantly ahead of the 5 year average of 15%. New York's corn planting is 42% completed and also ahead of the 5 year average of 34%. Pennsylvania has 48% of the corn planted, just above the 5 year average of 45%. A majority of pastures in the Northeast region are rated as either good or excellent. NATIONAL DAIRY RETAIL REPORT (DMN): Butter prices dropped 51 cents from two weeks ago with the national weighted average price at $2.53 per 1# package. The average was 4 cents lower than a year ago. Butter ads were over double the level of two weeks ago. Greek yogurt in 4-6 ounce packs averaged $1.00, up 2 cents from two weeks ago and up 1 cent from a year ago. Regular yogurt in 4-6 ounce packs, averaged 50 cents, up 2 cents from two weeks ago but down 5 cents from a year ago. The most advertised cheese category, 8 ounce shredded, had a weighted average advertised price of $2.38, up 11 cents from two weeks ago and 13 cents more than one year ago. The price for 8 ounce blocks, at $2.39, declined 5 cents from two weeks ago, but was 13 cents higher than a year ago. The ice cream national weighted average price is $3.28 per 48-64 ounce packs, up 26 cents from 2 weeks ago and up 6 cents from a year ago. INTERNATIONAL UPDATE (DMN): At the May 15th gDT session #92, average prices were lower for most commodities, with rennet casein being slightly higher. The all contracts price averages (US$ per MT) and percent changes from the previous average are: anhydrous milk fat, $4,598 -0.2%; butter, $3,846 -12.4%; buttermilk powder, $3,876 -5.1%; cheddar cheese, not traded; lactose, not traded; milk protein concentrate, not traded; rennet casein, $10,105 +3.7%; skim milk powder, $4,252 -2.8%; and whole milk powder, $4,722 -1.7%. MAY MILK SUPPLY AND DEMAND ESTIMATES (WAOB): Milk production for 2014 is forecast higher as lower feed costs and relatively strong milk prices are expected to support production. Commercial exports are forecast higher on robust international demand. Imports will be lower on greater domestic supplies. With higher domestic production, cheese, butter, and whey prices are forecast lower than last year, while nonfat dry milk (NDM) is higher largely on continued strength in international demand. Both Class III and Class IV prices are forecast lower. In the case of Class IV, lower forecast butter prices more than offset higher NDM prices. The all milk price is forecast at $18.85 to $19.85 for 2014. Forecast milk production in 2013 is unchanged from last month. Imports are raised. Exports are higher as abundant U.S. supplies and competitive prices are expected to spur foreign demand. Cheese, butter, and NDM prices are raised from last month while whey is lower. The Class III price is lowered as lower whey prices more than offset greater cheese prices. Class IV is up reflecting higher prices for butter and NDM. The all milk price is forecast at $19.50 to $20.00. FEBRUARY MAILBOX MILK PRICES (AMS & CFA): In February 2013, mailbox milk prices for selected reporting areas in Federal milk orders averaged $19.56, down $0.62 from the January 2013 average, but up $1.64 from the February 2012 average. The component tests of producer milk in February 2013 were: butterfat, 3.83%; protein, 3.15%; and other solids, 5.76%. On an individual reporting area basis, mailbox prices decreased in all Federal milk order reporting areas when compared to the previous month. Mailbox prices in February 2013 ranged from $22.60 in Florida to $17.67 in New Mexico. 1200CT Robert.Hunter@ams.usda.gov