MD DA950 NATIONAL DAIRY MARKET AT A GLANCE
December 19, 2014 MADISON, WI (REPORT 51)
CME GROUP CASH MARKETS (12/19)
BUTTER: Grade AA closed at $1.6100. The weekly average for Grade AA
is $1.6430 (-.2910).
CHEESE: Barrels closed at $1.5500 and 40# blocks at $1.6100. The
weekly average for barrels is $1.5760 (+.0745) and blocks, $1.6075
BUTTER HIGHLIGHTS: Butter manufacturers are focused on filling
the last of the holiday print orders. Production rates are mostly at
higher levels given the seasonal demand, heavy milk supplies, and
improving cream availability. However, a few butter makers are slowing
production for various reasons such as completion of holiday orders,
selling cream supplies, and seasonal maintenance updates and repairs.
Productions is mostly 80%, salted butter as export interest remains
limited in light of current international prices. Domestic demand is
good with expectations of reduced sales. Inventory levels are mixed,
while ranging from light to moderate. Bulk butter prices range from 5
cents under to 6 cents over the market, based on various time frames
and averages used. Friday at the CME Group, Grade AA butter closed at
$1.6100, down $0.2800 from a week ago. The weekly CME average dropped
from $1.9340 last week to $1.6430 this week. According to FAS,
January-November U.S. butter quota imports total 13.7 million pounds,
a 42% increase compared to same time span last year.
CHEESE HIGHLIGHTS: Many cheese plants are running close to full
capacity due to higher than normal intakes of manufacturing milk and
lower interest from spot milk load buyers. Holiday cheese demand is
active, but manufacturers expect rapid tapering in the next two weeks.
Some manufacturers are looking to clear inventories while others are
shifting product to aging programs. Declining prices have spurred
some near term demand. Some end users are scouting for cheese loads
at lower prices for December and early Q1 consumption. The market
undertone is unsettled. Foreign type cheese demand for select
varieties remains strong. European aged cheese stocks are declining.
Friday at the CME Group, barrels closed at $1.5500, up $0.0400 from
last Friday and 40# blocks at $1.6100, up $0.0100 from last Friday.
FLUID MILK: Farm milk production trends are variable throughout
the country. Across the southern tier of states, milk production is
rebounding from the seasonal low point. Florida posted no spot milk
load imports this week, compared to 90 loads imported during the same
week last year. Within the Northeast and Northwest, milk production is
rebuilding, but North Central dairy operators note on farm production
is edging downward. Processors' milk supplies are quickly building in
the second half of this week in most areas of the country. This is
mostly from significant declines in fluid and manufacturing milk
demand, as forthcoming school closings and manufacturing shutdowns
push milk volumes back to suppliers. Balancing plant operators are
weighing the capacity to handle the resulting intakes, with
expectations of milk volumes increasing for the next two weeks.
Across the regions, the drop in fluid demand has raised production for
many processing operations.
DRY PRODUCTS: Several dry product markets continue to show
weaker pricing trends. All regional low/medium and high heat nonfat
dry milk markets show supplies outstripping current demand.
Manufacturers are trying to build incremental firebreaks ahead of
rising supplies by finalizing sales for early next year. Near term
interest is dependent on price and location. Demand for dry
buttermilk is light, with back to back sales providing some insulation
from price risk for resellers and alleviating some inventories in the
hands of manufacturers. Dry whey markets exhibited general weakness
in pricing trends as supplies build. Efforts by some producers to
clear multiple loads are being hampered by buyers' awareness of
futures pricing for dry whey. The dry whole milk market remains under
pressure from international offerings, stalling sales. The lactose
market is weak, although prices are unchanged. Buyers and sellers are
focusing on new monthly and quarterly pricing during a time when
domestic stocks on hand are building. The whey protein concentrate 34%
price trend is weak as ample supplies of alternative proteins are
available to the feed and edible market sectors. Casein markets are
bearish as buyers have adequate supplies to cover needs in the early
part of 2015.
INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN AND EASTERN
EUROPE: WESTERN OVERVIEW: Western European milk production has moved
past the seasonal low point with nearly all countries showing at least
some marginal increases. Demand for fluid milk and cream are good
ahead of the yearend holidays. Farmgate prices have declined to the
point where those producers who are over quota are taking steps to
reduce or eliminate over quota production and levees. Culling rates
have increased in Europe as many producers are culling their lower
producing cows. Germany, Belgium, the Netherlands, Denmark and
Ireland are all currently trending over quota production levels.
According to ZMB preliminary data, January-October milk production in
the EU-28 is 5.1% higher than one year ago. Various member states
showed the following January-October changes, compared to last year;
Germany, +4.0%; France, +5.8%; UK, +9.1%; Belgium, +6.0% and Ireland
5.9%. EASTERN OVERVIEW: Eastern European milk production is
increasing. Loads of milk and cream going to Belarus manufacturing
plants have significantly declined. Weather conditions are typical
for this time of year and are not seen as restricting milk production.
Milk production in Poland is currently trending over quota limits.
Producers over quota will likely take steps to reduce milk deliveries
to avoid super levee fees. According to ZMB preliminary data,
January-October milk production in Poland is 7.7% higher compared to a
OCEANIA OVERVIEW: Australian milk production is trending lower,
but remains above year ago levels. Seasonal production forecasters
are calling for a 1%-2% gain over last year. In contrast to last
year, more milk is being channeled to SMP and cheese production in
lieu of WMP production, due to the better returns. Below average
rainfall over most of the country, in combination with increasing
temperatures, is beginning to pressure dairy producers to start or
increase supplemental feeding. The recently concluded Korea-Australia
Free Trade Agreement may boost Australian exports in the near future,
due to an early introduction of reduced tariffs. Hay harvesting is
near completion in most areas. In general, quality was up, but
volumes were down. Hay prices are variable and dependent on region
and rainfall within the region. Good quality hay is in good demand.
Producers in the dry areas of Victoria have begun feeding their 2014
silage, which is earlier than usual. Dairy Australia reports dairy
product exports for the July-October period totaling 225.5 thousand
MT, up 2.5% from the year ago period. The skim milk powder (SMP)
exports were up 28% from the same period last year. The total value of
exports for the July-October period is down 8.8%. New Zealand milk
production remains above year ago levels, but the increases over last
year's levels are declining. Lower export prices for milk powders
have led to significantly lower farmgate prices compared to a year
ago. Producers are taking measures to reduce costs wherever possible.
It is likely that supplemental feeding will be reduced or eliminated
and the milk production season will be shortened as cows are dried of
more quickly than last year. Some cooperative forecasters have
significantly reduced this season's forecast to show no increase over
last year, due to the bearish factors now affecting milk production.
Rabobank's December Rural Confidence Survey shows dairy producer
expectations for their farm business performance at its lowest since
2009. At the December 16 GDT event #130, average prices ranged from
9.5% lower to 10.8% higher from the prior event across categories. The
all contracts price averages (US$ per MT) and percent changes from the
previous average are: anhydrous milk fat, $4,200 +10.8%; butter,
$3,145 +10.4%; buttermilk powder, $2,466 -9.5%; cheddar cheese, $3,002
-0.6%; lactose, n.a.; rennet casein, $7,576 +4.5%; skim milk powder,
$2,320 -3.2%; sweet whey powder, n.a.; and whole milk powder, $2,270
JANUARY FEDERAL ORDER ADVANCE PRICES (FMMO): Under the Federal
milk order pricing system, the Class I base price for January 2015 is
$18.58 per cwt. This price is derived from the Class III skim milk
pricing factor of $11.35 and the advanced butterfat pricing factor of
$2.1787. A Class I differential for each order's principal pricing
point (county) is added to the base price to determine the Class I
price. The base Class I price decreased $3.95 per cwt when compared
to the previous month of December 2014. For selected consumer
products, the price changes are: whole milk (3.25% milk fat), -$3.96
per cwt, -$0.340 per gallon; reduced fat milk (2%), -$3.99 per cwt; -
$0.344 per gallon; fat-free (skim milk), -$4.03 per cwt, -$0.348 per
gallon. The advanced Class IV skim milk pricing factor is $9.93.
Thus, the Class II skim milk price for January 2015 is $10.63 per cwt,
and the Class II nonfat solids price is $1.1811. The two-week product
price averages for January are: butter $1.9706, nonfat dry milk
$1.2826, cheese $1.8141 and dry whey $0.5847.
AUGUST MILK SALES (FMO & CDFA): During August, 4.1 billion
pounds of packaged fluid milk products is estimated to have been sold
in the United States. This was 6.0% lower than August 2013. Estimated
sales of total conventional fluid milk products decreased 6.5% from
August 2013 and estimated sales of total organic fluid milk products
increased 4.3% from a year earlier.
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: www.ams.usda.gov/dairymarketnews
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