MD_DA950 Dairy Markets at a Glance Report 7 - Released on February 15, 2019 CME GROUP CASH MARKETS (2/15) BUTTER: Grade AA closed at $2.2500. The weekly average for Grade AA is $2.2525 (-.0325). CHEESE: Barrels closed at $1.4350 and 40# blocks at $1.5800. The weekly average for barrels is $1.4240 (+.0985) and blocks, $1.5745 (+.0865). NONFAT DRY MILK: Grade A closed at $.9875. The weekly average for Grade A is $.9925 (+.0015). DRY WHEY: Extra grade dry whey closed at $0.3525. The weekly average for dry whey is $0.3455 (-.0270). BUTTER HIGHLIGHTS: Throughout the country, cream is readily available for butter churning, and butter producers are capitalizing on lower cream premiums. In this way, butter production remains ongoing in each region of the nation, while inventories continue growing into cold storage for near future usage. In general, demand for print/bulk butter is fair to good. Bulk butter pricing varies among the regions: East, 5.0 cents to 8.0 cents over the market; Central, 5.0 cents to 7.0 cents above the market; West, 2.0 cents to 7.5 cents over the market, with various periods and averages used. CHEESE HIGHLIGHTS: Milk supplies continue to meet cheesemaking needs in all regions of the country. Fewer milk spot loads were reported by Midwestern cheese producers, those prices range from $1 to $2 under Class. Cheese demand is in an ebb and flow position with recently increasing market prices. Western contacts suggest Q4 cheese consumption bettered expectations. However, some suggest demand is not meeting current expectations, and inventories are undoubtedly long. Midwestern producers relay they are slowing production to manage inventory levels. Some Eastern producers also report shaving down inventories. Cheese market tones have shown some improvements week over week. That said, some contacts relay that without some recent market data it has been difficult to grasp recent market conditions. FLUID MILK: Farm milk production is steady to increasing in most regions of the country. In the Midwest and Northeast, wintry conditions have caused some trucking/hauling delays, but milk yields continue to meet both bottling and production needs. In the the Pacific Northwest, approximately 1,600 cows died due to a blizzard. Nevertheless, milk outputs were reported as even in these regions. Elsewhere in the West, milk production remains strong. Class I sales are mixed throughout the nation: from slow in the Midwest, to a bit up in the East, and generally steady in most areas of the Western region. Nationwide, cream volumes are readily available for most manufacturing needs. Butter churners are taking on plentiful cream intakes, as ice cream production has yet to pick up steam. F.O.B. cream multiples are 1.05-1.20 in the East, 1.10-1.20 in the Midwest, and 1.00-1.15 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) price ranges narrowed in the Central/East, while decreasing in the West. Price points continue to hover at around $1 in the Central/East, while Western contacts suggest inventories are increasing and finding less market traction. The high heat NDM price remained steady in the Central/East, while the bottom of the price range slipped in the Western region. Dry buttermilk prices remained steady in all regions. Demand is fairly health in the Central and East regions, while buyers are hesitant in the West as loads are mostly moving to meet contract needs. The dry whole milk pricing range held steady and well above the current WMP international values. Dry whey prices are noticeably lower in the West and Central regions, while slightly shifting down in the East. Nationwide inventory levels are higher as export marketers are looking elsewhere for dried whey outlets. Whey protein concentrate (WPC) 34% cash values are unchanged. Some producers have shifted focus to higher protein concentrations due to their healthier market conditions. Lactose prices increased one penny on the bottom of the mostly, while holding steady elsewhere. There were more offers of lower-mesh count lactose, but contact suggest Q2 contract prices are expected to be slightly higher than those of Q1. Rennet and acid casein prices were steady to slightly lower. INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: Semi hard cheese demand in Western Europe is strong and supplies are tight. Buying interest comes from inside the EU as well as export demand elsewhere. A number of potential buyers are disappointed to be turned away. Almost all current production is committed and has been sold in advance. Aging stocks have been drawn down to help meet demand. EASTERN: Ukraine has been striving to increase dairy production and dairy exports. These efforts have achieved positive results for some products. There are dairy plant expansions underway in Ukraine to manufacture some of the exported milk and cream into dairy products with greater profit returns. The EU-Singapore free trade agreement was ratified by the European Parliament this week. EU dairy products already enter Singapore duty free. OCEANIA OVERVIEW: AUSTRALIA: Temperatures in some areas still exceed 100 degrees Fahrenheit. The extreme temperatures noted two weeks ago are less intense. Hotter current temperatures tend to be in Eastern Australia. Perth has reached the low 90s, while Melbourne is better, in the 60s. NEW ZEALAND: A mild summer continues to benefit the dairy industry in New Zealand. New Zealand has generally not experienced temperatures above the mid-80s. The North Island and some of the South Island received about one half inch of rain. The rest of the South Island received intense showers leaving several inches of water. SOUTH AMERICA OVERVIEW: In Argentina/Uruguay, the sunny weather favored development of corn and soybean crops and helped to minimize muddy/flood conditions in several dairy farms. Meanwhile, showers intensified over central Brazil, while dryness persisted in the southern region of the country. In general, farm milk production in Brazil and all the Southern Cone region is seasonally trending down due to higher summer temperatures, which continue raising heat stress on dairy herds. NATIONAL RETAIL REPORT (DMN): Total conventional dairy advertisements decreased by 9 percent, and total organic dairy advertisements decreased by 17 percent. Compared to the previous week, the number of ads for conventional half gallon milk increased 33 percent, while for organic decreased 25 percent. Total conventional cheese advertisements decreased 2 percent, while organic cheese ads increased 13 percent compared to last week. The weighted average price of conventional 8 ounce block cheese is $2.17, and $4.99 for organic, representing an organic premium of $2.82. The U.S. average conventional one pound butter price is $3.75, up 17 cents from a week ago. The U.S. average organic one pound butter price is $5.29, up 11 cents from a week ago. FEBRUARY SUPPLY AND DEMAND ESTIMATES (USDA): Milk production for 2018 is lowered on available data through December. The milk production forecast for 2019 is reduced on lower expected first-half dairy cow numbers and continued slow growth in milk per cow. The 2018 and 2019 fat basis import forecasts are reduced from December on recent trade data and lower expected cheese and butterfat imports. The fat basis exports are unchanged for 2018 but the forecast is raised for 2019 primarily on strong expected demand for butter and butterfat products. On a skim-solids basis, the 2018 imports are raised on current trade data while the 2019 import forecast is unchanged. Skim-solids basis exports for 2018 are lowered, but the 2019 export forecast is raised from December on anticipated strong demand for nonfat dry milk (NDM). Dairy product prices for 2018 are adjusted to reflect available December price data. For 2019, the cheese price forecast is lowered while butter, NDM, and whey price forecasts are raised from December. The Class III price for 2019 is unchanged from December while the Class IV price is raised on higher butter and NDM prices. The 2019 all milk price forecast is raised to $16.90 to $17.60 per cwt. DECEMBER MILK SALES (USDA, FMMO, AND CDFS): During December 4.0 billion pounds of packaged fluid milk products were shipped by milk handlers in December 2018. This was 2.1 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 2.4 percent from December 2017 and estimated sales of total organic fluid milk products increased 2.0 percent from a year earlier. DECEMBER MARKET AND UTILIZATION SUMMARY (USDA): During 2018, 141.7 billion pounds of milk were received from Federally pooled producers. This volume of milk is 4.6 percent higher than the 2017 pooled volume. Regulated handlers pooled 41.0 billion pounds of producer milk as Class I products, up 0.8 percent when compared to the previous year. The Class I utilization increase over last year is primarily due to the addition of the California Federal Order which became effective November 1, 2018. Class I utilization decreased in 9 of the 10 Federal Milk Order Marketing areas prior to the addition of the California Order and increased in the Southwest Federal Milk Order Marketing area. The all-market average Class utilization percentages were: Class I = 29%, Class II = 13%, Class III = 43%, and Class IV = 15%. The weighted average statistical uniform price for 2018 was $15.51 per cwt, $1.45 lower than 2017's $16.96. JANUARY CONSUMER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food category is 256.4, up 1.6 percent from 2018. The dairy products index is 217.1, down 0.4 percent from a year ago. The following are the January 2018 to January 2019 changes for the selected products: fresh whole milk is -0.5 percent; cheese, -2.1 percent; and butter, +0.7 percent. Information for the period February 11 - 15, 2019, issued weekly Published by: Dairy Market News - Madison, WI ANGEL TERAN-RAMOS, 6084228593 Email: angel.teran@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