Dairy market news at a glance (Feb. 12)

View the complete USDA Dairy Market News

CME GROUP CASH MARKETS (2/12)

BUTTER: Grade AA closed at $1.3950. The weekly average for Grade AA is $1.3135 (+0.0455).

CHEESE: Barrels closed at $1.4900 and 40# blocks at $1.5575. The weekly average for barrels is $1.4980 (+0.0705) and blocks, $1.6025 (+0.0215).

NONFAT DRY MILK: Grade A closed at $1.1125. The weekly average for Grade A is $1.1200 (-0.0020).

DRY WHEY: Extra grade dry whey closed at $0.5425. The weekly average for dry whey is $0.5400 (+0.0050).

CHEESE HIGHLIGHTS: Cheesemakers relay they are somewhat shocked that milk remains as available moving into mid-February. During week 6 over the past two years, the spot milk low reached $3 under Class, while also reaching flat Class. This week, the low was $8.50 under and the high was $4 under Class. Spot milk offers were reportedly a little quieter, and some contacts who said they were paying $5 to $6 under in previous weeks reported $4 under. Demand notes were somewhat positive as cheese prices have decreased over the past couple weeks. Also, some COVID-19 restrictions easing in some areas have been beneficial to buyers. Still, food service demand remains steadily lackluster. Inventories are reported from balanced to growing nationwide. Cheese market tones are mixed.

BUTTER HIGHLIGHTS: With affordable cream available in every region, butter churning remains full bore throughout the United States. Eastern contacts report actively churning salted and unsalted varieties. Some Midwestern contacts reported some hauling related issues due to inclement weather, but most producers are running smoothly. Even with ample and growing stocks, butter plant managers expect some bullishness two weeks ahead of the "new crop" butter rule on the CME. Demand notes are generally unchanged: retail customers remain steadfast, while food service orders struggle to improve week to week. Butter market tones are showing some signs of life this week, after a notably weak early February.

FLUID MILK: Central milk production increases have been slowed by extremely cold temperatures. There is widespread concern with cow health and comfort. However, there is enough milk, coupled with lower Class I demand, that discounts as low as $8.50 under Class are available. Western milk production is strong and rising, with some milk being diverted to calf ranches. Eastern milk volumes are meeting processing needs. Ice cream production is increasing, and butter churning is active. Weather caused some hauling disruptions in the Mid-Atlantic and Central regions. F.O.B. cream multiples are 1.18- 1.24 in the East, 1.17-1.24 in the Midwest, and 1.00-1.21 in the West.

DRY PRODUCTS: Low/medium heat and high heat nonfat dry milk (NDM) prices were lower in the Central/East regions, as well as all West prices, except the bottom of the high heat price range. Production is busy or strong in all regions. Buttermilk powder prices were steady to lower in the Central and East, while West prices were stable on the mostly, with the price range expanding. Dry whole milk process are steady on a quiet market. Dry whey prices are steady to higher in all regions. Markets are bullish. Exports have been active but temporarily slowed due to Southeast Asia beginning the Lunar New Year holiday. The whey protein concentrate 34% price range is unchanged, but both ends of the mostly price series increased. The bottom of the lactose price range advanced but remaining prices are unchanged. Acid casein and rennet casein prices are steady.

ORGANIC DAIRY MARKET NEWS: Organic dairy producers are awaiting information as to whether a large national organic dairy cooperative will adjust organic milk pay prices. Typically, a decision is made early in a year. According to a national organization representing organic dairy producers, pending a 2021 adjustment, the 2020 farmgate pay price as a national year around average remains in effect at $31.55 per cwt. The 2020 range was a low of $27.13 and a high of $31.42, depending on the month. As a historical comparison, it is noted that in 2009 the average pay price was $27.13 and in 2012 it was $31.70.

NATIONAL RETAIL REPORT (DMN): Total conventional dairy ads decreased by 15 percent, while organic dairy ads increased by 26 percent. The most advertised dairy item this week is conventional 48 to 64-ounce containers of ice cream. The national weighted average price is $2.98, down 1 cent from last week. The national weighted average advertised price for conventional 1-pound butter is $3.23, 19 cents higher than last week. The second most advertised dairy item, conventional 8-ounce shred cheese, has an average price of $2.56, up 14 cents from last week.. The national weighted average advertised price for conventional Greek yogurt in 32 -ounce containers is $4.35, down 23 cents from last week. Organic 32- ounce containers of Greek yogurt have a national weighted average advertised price of $6.99. The national weighted average advertised price for conventional half gallon milk is $1.40, down 68 cents from last week. The national weighted average advertised price for organic half gallons is $3.79, down 15 cents from last week. Organic half gallon milk was the most advertised organic dairy item, followed by organic gallon milk.

FEBRUARY SUPPLY AND DEMAND ESTIMATES (WASDE): The 2020 milk production, trade, and stock estimates are adjusted to reflect December data. For 2021, the milk production forecast is raised from last month, primarily on higher dairy cow numbers. The 2021 fat basis import forecast is raised on higher expected imports of cheese and butterfat products, while exports are raised on higher shipments of butterfat. On a skim-solids basis, the import forecast is unchanged while the export forecast is raised, reflecting expectations of strong international demand. Annual product price forecasts for cheese and butter are lowered from the previous month on current prices, increased production, and larger stocks. Nonfat dry milk (NDM) and whey price forecasts are raised from last month on firm demand. The Class III price is reduced on the lower cheese price forecast and the Class IV price is also reduced, reflecting a lower butter price forecast. The 2021 all milk price forecast is reduced to $17.15 per cwt.

JANUARY CONSUMER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food category is 270.9, up 3.8 percent from 2020. The dairy products index is 231.5, up 3.8 percent from a year ago. The following are the January 2020 to January 2021 changes for selected products: fresh whole milk is +4.7 percent; cheese, +4.5 percent; and butter, -2.6 percent.