MD_DA950 DY, DAIRY MD DA950 NATIONAL DAIRY MARKET AT A GLANCE June 14, 2013 MADISON, WI (REPORT 24) CME GROUP CASH MARKETS (6/14): BUTTER: Grade AA closed at $1.5350. The weekly average for Grade AA is $1.5400 (-.0010). CHEESE: Barrels closed at $1.7725 and 40# blocks at $1.7225. The weekly average for barrels is $1.7700 (+.0450) and blocks, $1.7360 (+.0045). BUTTER HIGHLIGHTS: Butter production varies across the country. Churn operators indicate cream is available and they are sending some cream through the churns. Bulk butter production currently outpaces print butter as retail demand is slow to develop. Cream demand from ice cream/soft serve accounts is higher this week and luring cream loads away from butter production in all regions. Overall butter production is lower for the week. A few plant operators are purposefully selling cream into those markets to rein in butter inventory buildup. Bulk butter markets are diverse. Market participants found West bulk butter clearing at 5 cents under, Central butter pricing is flat, and East butter sales garnered up to 8 cents over the market. CME Group activity for the week netted a one cent decrease to Grade AA butter. Three sales transactions were finalized during the week. CHEESE HIGHLIGHTS: Cheese prices across the country are mixed this week. Process cheese was firmer, while cheddar blocks were lower. Swiss cheese wholesale prices increased following the release of Class III prices last week. Cheese production remains very active with additional Class I milk supplies finding their way to cheese manufacturers. While inventories are steady, buyers are looking to acquire product for Q3 in case summer production slows manufacturing. Cheese demand is felt to be increasing with signs of strength at the CME Group spot sales. Block prices showed steady activity with buyers looking to increase their inventory. Barrel sellers were harder to find with limited offerings. Barrels are again selling at a premium to blocks. At the CME Group, barrels closed at $1.7725 on Friday with blocks at $1.7225. Compared to last week's close, barrels are up 1.25 cents and blocks are 2.5 cents lower. FLUID MILK: Storms across much of the U.S. this week affected late planting schedules. Heat in the southern tier of states is stressing cows and production is beginning to show some signs of slowing down. Northern areas of the country were cooler. Delays in planting and late harvest of forages have processors worried about continued milk supplies. Class I usage levels are lower as schools end their sessions. Increased supplies of cream are finding good demand from Class II manufacturers as their production season nears its' peak. Ice cream and soft serve products are finally showing expected demand. Cream prices are steady to firm with some churns taking advantage of higher cream demand to slow butter production. DRY PRODUCTS: Nonfat dry milk prices are steady to higher. There is a firm undertone to the market. Export demand is good with SMP production limiting domestic NDM inventories. A large tender for export NDM is upcoming and the market is waiting for more information on amounts and pricing. Powder production is seasonally heavy, but supplies are being held confidently by manufacturers. Dry buttermilk prices are mixed. Production is slowing as more cream is going to Class II usage. Manufacturers are managing inventories to insure contract fulfillment. Whey prices are uneven with a mostly steady undertone. Cheese production is heavy and whey production is following suit. Inventories are adequate from both processors and brokers. Export demand is good with prices comparable to domestic prices. Whey protein concentrate 34% prices are mostly steady. High NDM prices are causing protein end users to look favorably at WPC 34%. Some resellers report tight available supplies. Lactose prices are unevenly steady with a firm undertone. International buyers are looking to acquire Q3 and Q4 coverage. ORGANIC DAIRY MARKET NEWS (DMN): AMS reports Total Organic Milk Products sales for April 2013, 191 million pounds, were up 13.5% from April 2012. Organic Whole Milk sales for April 2013, 50 million pounds, were up 18.5% compared with April 2012 and up 8.4% year-to-date compared with last year. Organic Reduced Fat Milk sales for April, 57 million pounds, were 26.9% above sales one year earlier and 7.0% above year-to-date sales last year. The national weighted average advertised price of organic milk half gallons, $3.59, is 16 cents higher than two weeks ago. The price range is $2.79 to $4.49. One year ago the weighted average advertised price was $3.24, 35 cents lower than currently. Conventional milk's price for half gallons, $1.00, is down 63 cents from two weeks ago. One year ago the price was $2.11. The current organic-conventional half gallon price spread is $2.59, compared with $1.80 two weeks ago. The weighted average advertised price for 32 ounce organic yogurt is $2.74, with advertised prices ranging from $2.50 to $3.00. The weighted average advertised price for 4-6 ounce organic yogurt is $.84, with prices ranging from 59 cents to $1.00. The breakdown of a homogenizer in a Texas milk plant this week caused a national organic brand of milk to transport volumes of organic milk elsewhere for processing. A Maine organic dairy cooperative continues to supply all of the organic cream it has available to organic ice cream manufacturers in New York City, with demand exceeding supply. Some of the cream is sold into manufacturing pasteurized and some unpasteurized. JUNE MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The milk production forecast for 2013 is unchanged. For 2014, the production forecast is lowered as relatively weak milk-to-feed ratios in the third and fourth quarter of 2013 are expected to slow production growth in the first half of 2014. Fat basis exports for 2013 are lowered based on slow butter exports through April. Skim-solid exports are higher based on expectations of continued robust nonfat dry milk (NDM) exports. Fat and skim basis exports for 2014 are unchanged. Fat basis imports are raised for 2013 and 2014. Forecasts for 2013 cheese and butter prices are lowered from last month, reflecting greater stocks and weaker-than-expected prices to date. The NDM price is raised on tightening supplies and expectations of continued robust export demand. The price range for whey is narrowed. As a result of the lower cheese price forecast, the Class III price is reduced. The Class IV price is down as lower butter prices more than offset higher NDM. For 2014, the butter price forecast is lowered as stocks remain high, but other product prices are unchanged. The Class III price forecast is unchanged, but the Class IV price is lowered. The all milk price is forecast at $19.60 to $20.00 for 2013 and $18.95 to $19.95 for 2014. APRIL MILK SALES (FMMO & CDFA): During April, 4.3 billion pounds of packaged fluid milk products is estimated to have been sold in the United States. This was 1.1% higher than April 2012. Estimated sales of total conventional fluid milk products increased 0.6% from April 2012 and estimated sales of total organic fluid milk products increased 13.5% from a year earlier. MARCH MAILBOX MILK PRICES (AMS & CFA): In March 2013, mailbox milk prices for selected reporting areas in Federal milk orders averaged $19.30, down $0.26 from the February 2013 average, and up $2.06 from the March 2012 average. The component tests of producer milk in March 2013 were: butterfat, 3.81%; protein, 3.15%; and other solids, 5.75%. On an individual reporting area basis, when compared to the previous month, mailbox prices decreased in all Federal milk order reporting areas except Wisconsin where the mailbox price remained the same. Mailbox prices in March 2013 ranged from $21.96 in Florida to $17.01 in New Mexico.