MD_DA950 Dairy Markets at a Glance Report 38 - Released on September 21, 2018 CME GROUP CASH MARKETS (9/21) BUTTER: Grade AA closed at $2.2350. The weekly average for Grade AA is $2.2760 (+.0460). CHEESE: Barrels closed at $1.3600 and 40# blocks at $16350. The weekly average for barrels is $ 1.3935 (-.0765) and blocks, $ 1.6170 (-.0130). NONFAT DRY MILK: Grade A closed at $0.8725. The weekly average for Grade A is $0.8730 (-.0120). DRY WHEY: Extra grade dry whey closed at $0.5150. The weekly average for dry whey is $0.5225 (+.0020). BUTTER HIGHLIGHTS: Although farm milk production is down in the East region due to humid weather patterns, butter makers report churning schedules are steady, but expected to rev up as baking season is around the corner. In the Central region, especially the Midwest, cream is a little tighter, but churning activity is steady to slightly higher, except for plants being temporarily closed due to recent floods in Wisconsin. In the West, butter production is active, while the market is firming. Nationwide, demands for bulk/print butter are fair/good while supplies are fairly available for near term buyers/end users¶ needs. Based on the CME Group, with various periods and averages used, this week, bulk butter pricing varies among regions: East, 5.0 cents to 8.0 cents above the market; Central, 0.0 cents to 7.0 cents above the market; West, 2.0 cents below to 7.0 cents above the market. The CME Group cash price for Grade AA butter is $2.2350, up $0.0050 compared to last Friday¶s price, $2.2300 CHEESE HIGHLIGHTS: Fresh cheese inventories are moving, and generally balanced. Northeastern contacts say cheese stores produced earlier in 2018 are adequate. Midwestern demand has slowed according to some cheesemakers, as barrel market prices have descended, and buyers are backing off. That said, cheese contacts expect markets will surmount another downcycle and return to steadiness near term. Cheese demand and production in the Western region are steady to higher. Milk in the West is accessible, whereas, in the rest of the country, milk volumes remain flat to lower. Spot milk prices in the Midwest ranged from Class III to $2 over. On Friday, the CME Group closing price for barrels is $1.3600, compared to last Friday¶s closing price of $1.4200. The closing price for blocks is $1.6350, compared to last Friday¶s closing price of $1.6050. FLUID MILK: Northeast milk production is lower, but some milk output is leveling off on the farms this week. Mid-Atlantic milk output off the farms is lower. Southeast milk production is fairly level this week. Hurricane Florence has impacted parts of the Southeast with heavy flooding. There have been reports of power outages and roads closures due to the storm. Some operations are closed at this time. Florida¶s milk production has leveled off. Fluid milk remains geographically variant in the Central region. In most areas, milk volumes remain lower. Bottling remains steady to stronger with schools back in session. Most Class III spot milk loads reported ranged from $.50 to $2.00 over. California milk production is just enough to meet the needs of buyers. Some reports suggest that milk premiums have increased recently. Milk supplies in Arizona are manageable even though handlers have to look for alternative ways to redistribute fluid milk loads. In New Mexico, farm milk production is flat to increasing following normal seasonal output rates. Bottled milk sales inched up this week. Pacific Northwest milk production is following typical seasonal patterns. Pleasant temperatures are promoting cow comfort and components are improving. Intakes are in good balance with processing. Strong milk production in the mountain states of Idaho, Utah and Colorado is continuing. Warm days and cool nights are helping cows recharge fully. Industry contacts say forages are in good supply. F.O.B. cream multiples are 1.27-1.33 in the East, 1.24-1.33 in the Midwest, and 1.10-1.27 in the West. DRY PRODUCTS: Central and East low/medium, and high heat prices are steady, even with some central producers tight or behind on orders. Buyers in the East are said to be uncertain about prices and some are slowing purchases to watch prices. In the West, spot prices for western low/medium heat nonfat dry milk are lower this week on the pricing range. Some buyers/end users in the West are taking a wait and see approach. Central and East dry buttermilk prices did not change on a slow trading week. Western f.o.b. cash prices for dry buttermilk are steady to slightly lower on the range, but unchanged on the mostly price series. Dry whole milk spot prices are unchanged from last week and are still in line with international WMP cash values. Dry whey prices in the Central region were steady to higher on an active trading week. Some of the lower spot prices are loads destined for Asia, but generally there was more trading both for export and domestically this week. Prices for dry whey in the East region increased on the bottom of the range. In the West, dry whey prices moved slightly higher at the bottom of the range but remained steady on the mostly price series. The market undertone is still strong despite concerns about global trade agreements and their potential repercussions on the whey market. Whey protein concentrate 34% prices moved higher at the bottom of both the range and mostly price series while holding steady at the top of each series. In general, industry contacts note a little more support for WPC 34% prices right now. Lactose prices are once again unchanged. Lactose production is steady. Both rennet and acid casein prices firmed. ORGANIC DAIRY MARKET NEWS (DMN): Total organic whole milk products sales for July 2018, 85 million pounds, climbed 7.2 percent compared with July last year. Total organic milk products sales for July 2018, 208 million pounds, were up 0.2 percent over the previous year and the highest logged for July over the last 5 years. The average advertised price of half gallon organic milk, $3.61, is down 44 cents from the previous report and 9 cents from one year ago. The difference between the average weighted price for organic half gallon milk and conventional half gallon milk resulted in an organic price premium of $1.75. NATIONAL RETAIL REPORT (DMN): The total number of conventional dairy ads increased 11 percent from last week, while organic dairy ads increased by 8 percent. Conventional cheese ad numbers increased 9 percent, but organic cheese ad numbers were unchanged. Ads for conventional 1# packages of shred cheese had the largest percentage increase for any dairy item, 236 percent. Total conventional yogurt ads increased by 20 percent and organic yogurt ads increased by 28 percent. AUGUST MILK PRODUCTION (NASS): Milk production in the 23 major States during August totaled 17.2 billion pounds, up 1.4 percent from August 2017. July revised production, at 17.3 billion pounds, was up 0.5 percent from July 2017. The July revision represented an increase of 16 million pounds or 0.1 percent from last month's preliminary production estimate. Production per cow in the 23 major States averaged 1,974 pounds for August, 28 pounds above August 2017. This is the highest production per cow for the month of August since the 23 State series began in 2003. The number of milk cows on farms in the 23 major States was 8.74 million head, 3,000 head less than August 2017, but 4,000 head more than July 2018. OCTOBER FEDERAL MILK ORDER ADVANCED PRICES (FMMO): Under the Federal milk order pricing system, the base Class I price for October 2018 is $16.33 per cwt. This price is derived from the advanced Class III skim milk pricing factor of $7.71 and the advanced butterfat pricing factor of $2.5393. A Class I differential for each order's principle pricing point (county) is added to the base price to determine the Class I Price. The advanced Class IV skim milk pricing factor is $6.11. Thus, the Class II skim milk price for October 2018 is $6.81 per cwt, and the Class II nonfat solids price is $0.7567. The two-week product price averages for October 2018 are: butter $2.2684, nonfat dry milk $0.8536, cheese $1.6753 and dry whey $0.4075. Information for the period September 17 - 21, 2018, issued weekly Published by: Dairy Market News - Madison, WI Eric Graf, 608.422.8590 Email: eric.graf@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