MD_DA950 Dairy Markets at a Glance Report 8 - Released on February 26, 2021 CME GROUP CASH MARKETS (2/26) BUTTER: Grade AA closed at $1.4700. The weekly average for Grade AA is $1.4860 (-0. 0128). CHEESE: Barrels closed at $1.4200 and 40# blocks at $1.6175. The weekly average for barrels is $1.4090 (-0.0329) and blocks, $1.6015 (+0.0677). NONFAT DRY MILK: Grade A closed at $1.1325. The weekly average for Grade A is $1. 1075 (+0.0044). DRY WHEY: Extra grade dry whey closed at $0.5575. The weekly average for dry whey is $0.5490 (+0.0015). CHEESE HIGHLIGHTS: Cheese inventories vary from East to West. In the East, producers are not overly concerned about inventories. Western contacts relay that setbacks at ports are delaying shipments abroad, as inventories grow. Milk availability remains ample. That said, spot milk prices are nearly aligned with those last year during week 8. Spot milk prices were $7 to $2 under Class in the Midwest (compared to $6 to $2 under Class last year). Undoubtedly, southern region plants being offline for, in some cases, a majority of the previous week have plants in need of milk refilling depleted pipelines. Cheese production is noted as variant. Eastern contacts relay healthy milk supplies are leading to max production, but Western and Midwestern producers report variable production schedules from one plant to the next. They primarily cite food service demand vulnerability as the difference this year in volatile schedules. Cheese market tones received a late week boost, but there are more questions than answers currently regarding longer term bullishness/stability. BUTTER HIGHLIGHTS: Cream is plentiful nationwide, and butter churning remains active. Although food service demands are seasonally lower due to dine-in restrictions, production is ramping up to support spring holiday retailer promotions. Additionally, industry contacts report increasing demand from export markets, particularly for unsalted butter. Bulk butter availability is notably ample. That said, with export interests increasing, some contacts suggest a shift in production from salted to unsalted butter is a strong potential, depending upon needs and capabilities. After a bullish week 7 on the CME, prices dipped midweek, but regained some momentum Thursday. FLUID MILK: Milk production has potentially peaked in Florida, while output in parts of the Central U.S. is somewhat lower due to winter weather storms. Bottlers and manufacturers are recovering from the recent winter storms in parts of the country. In the East and West, milk producers were less affected and report that production has largely remained steady. In the East, milk volumes are fairly available; in the West manufacturers have plenty of milk available for most processing needs and Class I sales are up slightly as the pipeline refills. Some in the East have reported picking up loads from other storm hit regions for manufacturing needs. Spot milk prices rose to $2 below Class on the top of the range, but prices moved to $7 under on the low end, as the range expanded from $6.50 to $4 under the previous week. Condensed skim milk is available for spot load purchases in the East and West as inventories remain high. F.O.B. cream multiples for all classes are 1.05-1.26 in the East, 1.14–1.24 in the Midwest, and 1.03–1.21 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk prices shifted downward in the mostly series across the U.S., while high heat prices have shifted slightly upwards. Following the recent winter storms in the West, many balancing plant operators who had to close have begun reopening and are again drying nonfat dry milk. Dry buttermilk market tones have been steady to slightly firming throughout all regions, with mixed price movement. Dry whole milk prices have climbed slightly at the bottom end of the range as prices have reportedly aligned with international pricing. Demand for dry whey is outpacing production in the Central and West regions, leaving little availability for spot purchase. In the Northeast, however, whey inventory is present for both spot and contract demands. Dry whey price ranges have moved higher in every region. Production of whey protein concentrate 34% has remained steady, while strong demand and low inventories have caused some buyers to look to foreign markets to meet their needs. Lactose exports to Asia continue to be delayed due to shipping difficulties on the west coast. Industry contacts report that production of lactose is steady, while many are working to fulfill Q2 contracts. Most production of acid casein is committed, causing the market to remain tight and leading to a rise in prices; this is contrasted by higher production of rennet casein, which is helping to keep prices steady. ORGANIC DAIRY MARKET NEWS: Organic Milk Retail Prices for Selected U.S. Cities. February 2021 in-store surveys of supermarkets in selected U.S. cities show that averages prices for organic whole milk in the half gallon container ranges from $3.00 in Indianapolis, IN to $5.84 in Pittsburg, PA. Surveyed cities that experienced noteworthy changes in average prices from January 2021, include Atlanta, GA, down $1.01; New Orleans, LA, down 60 cents; Portland, OR, decreased 15 cents. The Cincinnati, OH, half gallon, organic whole milk average price increased 14 cents, while Denver, CO and Oklahoma City, OK both grew 10 cents. The U.S. February 2021 simple average price was $4.05, down 5 cents from last month. For the last week of February, total organic ads for surveyed retail stores increased 46 percent. Organic cream cheese, 8 oz packaging, had the largest percent in ad changes, increasing 1,512 percent, respectfully. Total organic milk ads increased 43 percent compared to last reporting week. In the Southwest and Southcentral regions, organic dairy ads increased 151 percent and 111 percent, respectfully. Organic milk and yogurt advertisement totals increased 141 percent in the Southwest region this week. NATIONAL RETAIL REPORT (DMN): As weather has cleared up across much of the country, total conventional dairy advertisements increased 23 percent, while organic ad numbers grew 46 percent. The number of conventional butter ads increased 104 percent weekly, while plain yogurt in 32-ounce containers saw the largest increase on the conventional aisle week to week, at over 500 percent. Organic cream cheese increased over 1,500 percent week to week, as the spring season draws near. JANUARY COLD STORAGE (NASS): On January 31, U.S. cold storage holdings of butter totaled 328.4 million pounds, up 20 percent from the previous month, and up 33 percent from January 2020. Natural American cheese holdings total 800.8 million pounds, unchanged from the previous month, but 3 percent more than January 2020. Total natural cheese stocks were 1.398 billion pounds, unchanged from last month, but 3 percent more than January 2020. JANUARY MILK PRODUCTION (NASS): Milk production in the 24 major States during January totaled 18.3 billion pounds, up 1.8 percent from January 2020. December revised production, at 18.0 billion pounds, was up 2.6 percent from December 2019. The December revision represented a decrease of 74 million pounds or 0.4 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 2,049 pounds for January, 15 pounds above January 2020. The number of milk cows on farms in the 24 major States was 8.93 million head, 92,000 head more than January 2020, and 6,000 head more than December 2020. JANUARY MARKET SUMMARY AND UTILIZATION REPORT (FMMO): During January, 10.8 billion pounds of milk were received from Federally pooled producers. This volume of milk is 20.1 percent lower than the January 2020 volume. Regulated handlers pooled 3.7 billion pounds of producer milk as Class I products, down 5.1 percent when compared to the previous year. The all-market average Class utilization percentages were: Class I = 34 percent, Class II = 16 percent, Class III = 14 percent, and Class IV = 37 percent. The weighted average statistical uniform price was $15.27 per cwt, $1.43 lower than last month and $2.91 lower than last year. NOVEMBER MAILBOX MILK PRICES (FMMO): In November 2020, mailbox milk prices for selected reporting areas in Federal milk orders averaged $19.15 per cwt, up $1.17 from the October 2020 average but down $0.84 per cwt from the November 2019 average. The component tests of producer milk in November 2020 were: butterfat, 4.05 percent; protein, 3.28 percent; and other solids, 5.76 percent. FEBRUARY RETAIL MILK PRICES (FMMO): U.S. simple average prices are: $3.59 per gallon for conventional whole milk, $3.55 per gallon for conventional reduced fat 2% milk, $4.05 per half gallon organic whole milk, and $4.05 per half gallon organic reduced fat 2% milk. Information for the period February 22 - 26, 2021, issued weekly Published by: Dairy Market News - Madison, WI JESSICA MUELLER, 608-422-8589 Email: jessica.mueller@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