MD_DA950 Dairy Markets at a Glance Report 41 - Released on October 13, 2023 NOTICE: After October 16, 2023, all information found on this report will transition to a new PDF format. The same data will be collected and disseminated through AMS Marketing Analysis and Reporting Services (MARS) platform. The new pdf report can be accessed on the AMS website at: https://www.ams.usda.gov/mnreports/ams_1054.pdf CME GROUP CASH MARKETS (10/13/2023) BUTTER: Grade AA closed at $3.3600. The weekly average for Grade AA is $3.4430 (+0.0075). CHEESE: Barrels closed at $1.6450 and 40# blocks at $1.7000. The weekly average for barrels is $1.6190 (+0.0660) and blocks, 1.7015 (N.C.). NONFAT DRY MILK: Grade A closed at $1.2200. The weekly average for Grade A is $1.2050 (+0.0255). DRY WHEY: Extra grade dry whey closed at $0.3350. The weekly average for dry whey is $0.3185 (+0.0285). BUTTER HIGHLIGHTS: Cream volumes are slim in the Northeast and Central regions, though contacts in the latter region say cream offers are growing this week. Contacts in the West report increasing cream availability, though cream remains somewhat tight overall. Butter production is mixed in the West. Regional butter makers say retail production is strong to steady, but bulk butter output is steady to lighter. In the Northeast, butter makers say they are utilizing contracted cream loads to keep churns running. Central region butter production is generally unchanged from last week, and demand is somewhat steady. Some contacts in the region are concerned that butter orders will decline when holiday pipelines are filled up. In the East, contacts say retail butter demand is softening. Demand for butter from retail and food service customers is steady in the West, but contacts note bulk butter sales have been lighter recently. Bulk butter inventories are somewhat tight in the West, as butter makers are focusing their production on retail butter output. Bulk butter overages range from 4.0 to 11.0 cents over market value. CHEESE HIGHLIGHTS: Milk output is increasing in the Northeast, and contacts report more volumes are becoming available for cheese production. In the Midwest, milk production is trending higher, but contacts report spot loads remain somewhat limited. Spot loads of milk are trading in the Midwest at or near $1 over Class III. Demand for Class III milk is strong in the West, and cheesemakers in the region say extra spot loads of milk are limited. Cheese production in the region is steady. Contacts in the Midwest report steady to lower cheese production this week, as some plants are down for scheduled maintenance. In the Northeast, cheese production schedules are steady to stronger, despite persistent labor issues. Cheese inventories are growing in the Northeast, while holding steady in the Midwest. Meanwhile in the West, some cheesemakers say inventories are declining slightly. Retail and food service cheese demands are strong in the Northeast and steady in the West. Contacts in the Midwest report health demand for cheese. FLUID MILK: Milk production varies throughout the country. In the Midwest, contacts report milk volumes would typically be sufficient to keep processors near capacity at this time of year, though this is not the case this year. Some contacts in the region postulate that farm closures this year, or simple supply and demand realities, are playing into current regional milk availability. Demand for Class I milk is noted as strong or steady within each region. Cheesemakers in the Northeast say increasing regional milk production is enabling them to run increased production schedules, but Class III demands continue to outpace production. Cream volumes remain tight in the East. Midwestern contacts report increased cream availability this week, and some suggest the region is nearing the seasonal point where volumes shift from tight to available. In the West, cream remains tight, but contacts say volumes are more available in the northern reaches of the region. Cream multiples are 1.38 - 1.46 in the East, 1.26 - 1.36 in the Midwest, and 1.09 - 1.35 in the West. DRY PRODUCTS: Prices for low/medium heat nonfat dry milk (NDM) have been somewhat bullish throughout all regions this week. Contacts in the Central and West regions note steady to stronger demand for low/medium heat NDM from buyers in Mexico recently. High heat NDM prices moved higher in the West, while holding steady in the other regions. Prices for dry buttermilk moved higher in the Central and East regions, while only the bottom of the West buttermilk price range moved higher. The top of the price range for dry whole milk moved higher this week, while the bottom held steady. Contacts in each region note dry buttermilk inventories are growing tighter. When compared to last week, prices received for dry whey were steady or higher this week. Contacts report strengthening demand for dry whey. Some dry whey manufacturers say bullish market tones for higher whey protein concentrates are causing them to shift production towards those commodities. This factor and an uptick in demand are also having an impact on the whey protein concentrate 34 % market, pushing prices at the bottom of the range higher. Lactose demand is picking up, and prices moved higher at the bottom of the range this week as well. Prices for acid and rennet casein were unchanged this week. INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPEAN OVERVIEW: In Western Europe, weekly milk intakes are still declining seasonally but are fast approaching the nadir of the milk production season. Although milk output volumes will begin to increase soon, market participants are uncertain of how much milk may be available to processors in the coming months. This uncertainty has kept spot milk prices above current milk pay prices. The European Commission released their short-term outlook, autumn addition. In the report, dairy analysts expect milk production to increase 0.3 percent for 2023 and predict 2024 milk production to remain stable. EASTERN EUROPEAN OVERVIEW: Milk production in Eastern Europe, although seasonally decreasing, has remained strong within parts of the region. For the 2023/24 grain shipment season that began in July, Ukraine has shipped 6.2 million tons of grain versus the 7.5 million tons shipped the previous season. Market participants suggest that blockages of the Black Sea ports and the ability to ship limited volumes of grain through smaller Danube River ports and western land crossings have reduced shipments. OCEANIA OVERVIEW: NEW ZEALAND: In New Zealand, a major milk co-operative has raised the milk price forecast for 2023-2024 to the delight of local dairy farmers, who have previously experienced constant reductions in the milk price. On the demand side, market representatives attribute the increase in the milk price forecast to a jump in demand, which some suggest is prompted by the El Nino outlook. AUSTRALIA: In Australia, as seasonally low milk output continues to challenge the country, sources note that Victoria had a successful milk production year, while producing 63 percent of Australia's milk during 2022-2023. Victoria also led Australia dairy exports, valued at $2.5 billion. The Australia dairy industry could face another El Nino, creating drier conditions that may affect local feed supplies. Current projections from industry representatives, apart from the El Nino risk, point to average yields and moderate declines in feed prices. SOUTH AMERICA OVERVIEW: Seasonal milk production is improving throughout the region. Spring flush is on the horizon if not already occurring in some localities. For the first time in the 2020s, there is not a full-on drought in key dairy basins on the continent. That said, the drought effects are still being felt in Argentina, as recovery continues for farmers in that country. In general, contacts concur that milk production is expected to continue to pick up in earnest when compared to previous years. NATIONAL RETAIL REPORT: This week, there is a 55 percent decrease in total conventional dairy ads, but ad totals for surveyed organic dairy items grew 13 percent. Cheese posted the highest number of ads for total conventional dairy commodities. In the organic sector, milk had the highest volume of dairy ads. Total conventional cheese ads increased by 47 percent, but total organic cheese ads declined by 40 percent. In the conventional cheese category, 6 to 8 ounce shreds cheese was the most advertised item. The weighted average advertised price is $2.41, compared to $2.25 last week. The weighted average advertised price of half gallon organic milk is $4.39, compared to $4.43 a week ago. There is a $2.51 organic premium. SUPPLY AND DEMAND (WAOB): The milk production forecast for 2023 is raised from last month on slightly more rapid growth in milk per cow. The forecast for 2024 is unchanged from last month. Fat basis imports for 2023 are unchanged from last month. Higher expected imports of butter in 2024 support a higher fat-basis import forecast although cheese imports are forecast lower. Recent strength in butter prices and expectations of continued firm demand support an increase in the butter price for 2023. Cheese is reduced on current prices and continued large stocks while the NDM price is raised on current prices. SEPTEMBER PRODUCER PRICE INDEX (BLS): The September PPI for all food is 257.2, up 0.5 percent from 2022. The dairy products index is 236.1, down 5.9 percent from a year ago. The following are the September, year to year percentage changes for selected products: fresh whole milk, -5.7; cheese, -5.5; and butter, -15.3. SEPTEMBER CONSUMER PRICE INDEX (BLS): The September CPI for all food is 324.7, up 3.7 percent from 2022. The dairy products index is 268.4, down 0.2 percent from a year ago. The following are the August, year to year percentage changes for selected products: fresh whole milk is -3.6; cheese, -2.8; and butter, -4.0. NOTICE: The Federal Milk Marketing Order Pricing Formula Hearing began August 23rd. For more information about the hearing, visit the following: https://www.ams.usda.gov/rules- regulations/moa/dairy/hearings/national-fmmo-pricing-hearing. If you have any questions, please email FMMOHearing@usda.gov. NOTICE: AMS Dairy Program is excited to have an integral role in hosting the International Dairy Federation's World Dairy Summit 2023 which will take place Monday October 16 through Thursday October 19, 2023, at Chicago's McCormick Place. Onsite registration is available. Please visit the World Dairy Summit website to learn more. Helpful Links: World Dairy Summit 2023 Website: https://idfwds2023.com/ International Dairy Federation: https://fil-idf.org/ NOTICE: USDA Announces Milk Loss Assistance for Dairy Operations Impacted by 2020, 2021 and 2022 Disaster Events. Administered by the Farm Service Agency (FSA), signup for MLP begins Sept. 11 and runs through Oct. 16, 2023. See https://www.fsa.usda.gov/news-room/news- releases/2023/usda-announces-milk-loss-assistance-for-dairy-operations-impacted-by-2020- 2021-and-2022-disaster-events for more details. USDA MARKET NEWS MOBILE APP: The free USDA Market News app is available in both IOS and Android versions and may be downloaded through the Apple and Google Play stores. Search for "USDA Market News Mobile Application" to download the app and begin exploring its potential. The app allows the user to customize the commodity areas and market types they wish to see. All Dairy Market News reports that are available online are also available through the mobile app. NOTICE: USDA AMS Dairy Export Certificate System Overview recorded webinar available at this link: https://www.zoomgov.com/rec/play/gcYPnXVtq1SJACfthlYGz4XD5dnAbj79uEjAfKr4918wScYZNXJ_7UxH3 sKBH77gKMkVgUX2sXA1rmxR.F0TmEZLpV-l6WS4S?startTime=1673287218000 Information for the period October 9 - 13, 2023, issued weekly Published by: Dairy Market News - Madison, WI Andrew Mattheis, 608-422-8590 Email: andrew.mattheis@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