MD_DA950 Dairy Markets at a Glance Report 24 - Released on June 15, 2018 CME GROUP CASH MARKETS (6/15) BUTTER: Grade AA closed at $2.3525. The weekly average for Grade AA is $2.3640 (-.0160). CHEESE: Barrels closed at $1.4500 and 40# blocks at $1.5950. The weekly average for barrels is $1.5150 (-.0075) and blocks, $1.6200(+.0235). NONFAT DRY MILK: Grade A closed at $.7875. The weekly average for Grade A is $.7870 (-.0240). DRY WHEY: Extra grade dry whey closed at $.4100. The weekly average for dry whey is $.4130 (+.0075). BUTTER HIGHLIGHTS: Butter churning varies across the country. In the West, production has been driven by ample amounts of affordable cream, while some processors begin to sell off some cream in the spot market. In the Central region, butter making varies by plant as some manufacturers continue microfixing, while others are taking on heavier loads of cream in large volumes. In the East, butter operators report steady output, but cream supplies are reported as becoming less accessible. Nationwide, retail and food service buying interest is mostly fair/good. Based on the CME Group with various periods and averages used, this week, bulk butter pricing is ranging in each region as follows: East, even to 8.0 cents above the market; Central, 0.0 cents to 7.0 cents above the market; West, 1.5 cents below to 7.0 cents above the market. The CME Group cash price for Grade AA butter is $2.3525, down $0.0375 compared to last Friday¶s price, $2.3900. CHEESE HIGHLIGHTS: Cheese production nationwide varies depending on the region and the type of cheese being produced. The overall cheese production is steady to decreasing, as mentioned from last week, in order to avoid overproduction. As result, some plants in the Central region report reducing production from five days to four. However, Italian and cheese curd production are steady and strong, as milk supplies are readily available. Spot milk prices ranged from $1.50 to $3.50 under Class. Cheese inventories are balanced to increasing. The cheese demand is mixed, oscillating from week to week. Some cheesemakers in the Central region expressed concerns about the trade dispute. Meanwhile, a few sellers in the West have started feeling the impact of the tariff regulations. The U.S. cheese market tone is steady to decreasing, as steady cheese prices on the CME dropped later in the week. The CME Group closing price for barrels is $1.4500, compared to last Friday¶s closing price of $1.5650. The closing price for blocks is $1.5950, compared to last Friday¶s closing price of $1.6350. FLUID MILK: Milk output remains robust in the East and Midwest. In parts of the Southwest and West, milk yields are beginning the summer decline. Milk output in the mountain states of Idaho, Utah and Colorado is heavy. As schools are out or in their wrap-up stages nationally, milk handlers are looking to relocate milk loads. Cheese producers in the Midwest are still receiving spot milk discounts, and offers are up from last week. Condensed skim supplies are readily available throughout the country. Ice cream manufacturers are dipping into the cream pool this week, as cream supplies are tightening. That said, both ice cream makers and butter producers in the Central U.S. relayed taking on fairly heavy and available cream supplies this week. Dairy farm employment issues are being discussed throughout the country, as some Central region contacts have suggested that dwindling employee numbers on dairy farms are expected to lead to a growing number of farmers using robotic milking systems in the near future. F.O.B. cream multiples are 1.20-1.32 in the East, 1.22-1.33 in the Midwest, and 1.05-1.28 in the West. DRY PRODUCTS: Nonfat dry milk (NDM) prices slipped across all regions, following some market uncertainty and quiet export interests. Nonfat dry milk spot market activity was relatively quiet, and market tones are uncertain. Dry buttermilk prices held steady nationally, and market tones are somewhat more stable than those of NDM. As ice cream producers are taking in condensed buttermilk at healthy clips, buttermilk drying is based on contractual obligations. Therefore, many producers are reporting tight to balanced supplies for the dried variety. Dry whole milk prices edged up on the bottom of the range. Domestic dry whole milk prices are above whole milk powder values internationally, posing a potential drawback for domestic producers near term. Dry whey continues its upward shift, as most national prices increased. The lone exception was on the bottom of the price range in the Central region, possibly due to food grade whey being packaged in totes, making it difficult to use. The mostly price series in both the West and Central regions shifted up and market tones are generally positive. Northeastern contacts suggest whey markets are near their peak. Whey protein concentrate (WPC) 34% prices shifted up. WPC34% demand is mixed depending on brand and/or specificity. Some producers have suggested shifting production from higher protein blends to WPC34% this summer, which may balance or grow currently low inventories. Lactose prices shifted upward, as spot prices are generally higher than earlier in the year. Some lactose end users report planning to wait for potential price decreases, as their supplies are adequate near term. Acid and rennet casein prices are steady. Buyers¶ interest for both have ebbed, and spot market activity was subdued. ORGANIC DAIRY MARKET NEWS (DMN): AMS reports total organic milk products sales for April were 211 million pounds, up 4.9 percent from April 2017, but down 0.1 percent January-April 2018, compared with the same period of 2017. Organic whole milk sales for April 2018, 86 million pounds, were up 11.6 percent compared with April of the previous year and up 7.1 percent year-to-date 2018 compared with 2017. Across the nation, organic advertising totaled 6 percent above the previous week. In the major organic dairy commodity categories, which includes milk, cheese and yogurt, ads numbers were +9 percent, +34 percent, and -70 percent respectively. Regions that typically set the pace for organic retail ad numbers, the Northeast and Midwest, noted declines of 67 percent and 26 percent, respectively. The organic retail milk price premium, the price difference between half gallon organic and conventional milk, is $2.01, an increase of 50 cents over the previous week¶s organic premium. Organic ice cream, an addition to the percentage of total ads by commodity this week, seized 17 percent of the pie. NATIONAL RETAIL REPORT (DMN): The total number of conventional ads increased by 2 percent week over week. On the organic side, however, ads increased by 6 percent. The national weighted average advertised conventional milk price for half gallons is $2.01, down 9 cents from a week ago, while milk in one gallon bottles averaged $2.82, down 13 cents. Total conventional advertisements decreased 3 percent, but organic cheese ads increased 34 percent. APRIL MILK SALES: During April 2018, 3.9 billion pounds of packaged fluid milk products are estimated to have been sold in the United States. This was 0.4 percent higher than April 2017. Estimated sales of total conventional fluid milk products increased 0.2 percent from April 2017 and estimated sales of total organic fluid milk products increased 4.9 percent from a year earlier. JUNE MILK SUPPLY AND DEMAND ESTIMATES (WAOB): The milk production forecast for 2018 is reduced from last month on slightly lower cow numbers and slower expected growth in milk per cow. No change is made to the annual cow herd for 2019, but the milk production forecast for 2019 is lowered from last month on continued slow growth in milk per cow. For 2018, fat basis exports are raised from the previous month as second-quarter exports are strong and continued strength in sales of a number of fat-containing products will largely mitigate the impacts of Mexico¶s tariffs on U.S. cheese. For 2019, the fat basis export forecast is lowered. Skim-solids basis export forecasts for 2018 and 2019 are raised from the previous month on robust demand for nonfat dry milk and lactose thus far in 2018, and this strength is expected to carry into 2019. Fat basis imports for 2018 and 2019 are raised on higher imports of butterfat products, while skim-solids basis import forecasts for 2018 and 2019 are reduced on lower imports of milk proteins and a number of other dairy products. The 2018 cheese price is unchanged at the midpoint of the range, but is raised for 2019. The 2018 butter price forecast is raised, but is reduced slightly for 2019. Nonfat dry milk (NDM) and whey price forecasts are raised for both 2018 and 2019 on strong demand and a reduced production forecast. For 2018, the Class III price is raised on the stronger whey price. The Class IV price forecasts reflect higher butter and NDM prices. For 2019, both Class III and Class IV prices are raised. The all milk price is forecast higher at $16.60 to $17.00 per cwt for 2018 and is increased to $16.70 to $17.70 per cwt for 2019. MAY CONSUMER PRICE INDEX (BLS): The May CPI for all food is 253.1, up 1.2 percent from 2017. The dairy products index is 215.7, down 0.6 percent from a year ago. The following are the May to May changes for selected products: fresh whole milk is -3.7 percent; cheese, +1.1 percent; and butter, +2.1 percent. Information for the period June 11 - 15, 2018, issued weekly Published by: Dairy Market News - Madison, WI JESSICA MUELLER, 608-422-8589 AL YANG, 608-422-8598 Email: Jessica.Mueller@ams.usda.gov Al.Yang@ams.usda.gov Additional Dairy Market News Information: Dairy Market News (DMN) by Phone: (608)422-8602 DMN Website: http://www.ams.usda.gov/market-news/dairy DMN Database Portal: http://www.marketnews.usda.gov/mnp/da-home