Dairy market news at a glance (March 1-5)

View the complete USDA Dairy Market News for March 1-6

CME GROUP CASH MARKETS (3/5) BUTTER: Grade AA closed at $1.6900. The weekly average for Grade AA is $1.6815 (+0.1955).

CHEESE: Barrels closed at $1.5075 and 40# blocks at $1.7325. The weekly average for barrels is $1.4465 (+0.0375) and blocks, $1.6655 (+0.0640).

NONFAT DRY MILK: Grade A closed at $1.1775. The weekly average for Grade A is $1.1690 (+0.0615).

DRY WHEY: Extra grade dry whey closed at $0.5800. The weekly average for dry whey is $0.5695 (+0.0205).

CHEESE HIGHLIGHTS: Although rare in the past year, food service focused cheese producers received some positive news this week as a growing number of states are lifting, or indicating plans to ease public dining restrictions. Retail sales are noted as healthy, which has been the case throughout most of the past year, but food service sales have been notably more affected. Midwestern spot milk prices remained on par with last week. That said, a number of cheesemakers mentioned receiving fewer offers this week when compared to previous weeks. Unsurprisingly, milk was readily available in the Eastern and Western regions. As cheese market prices have met some bulls this week, there were a few more notes indicating growing cheese inventories, which could keep market tones in check.

BUTTER HIGHLIGHTS: Cream is abundant. Spot cream multiples are within fiscal reach for butter producers nationwide. Plant managers report very active churning schedules as they work to process the deluge of available cream. Butter inventories are heavy, but in the domestic market, retailer and food service demand is increasing in anticipation of spring holiday baking. Bulk interest is also high as buyers seek insulation against potential market uncertainty as well as coverage for projected needs through the balance of the year. U.S. butter prices are competitive internationally and export interest is increasing. The market has seesawed in the weeks leading up to the March 1 “new crop” butter rule on the CME, but few foresaw the nearly $0.25 bump in the two days following.

FLUID MILK: Milk output in the East is strong, with Florida reaching its peak. Industry contacts report an earlier than usual spring flush in California, with milk production slighter higher than this time a year ago. Bottling operations are active nationwide to keep up with demands. Some plant managers are still navigating the impact of the winter storms last month. Cream availability ranges from stable to plentiful nationwide. Eastern manufacturers exerted a healthy pull on the cream market for seasonal supplies. In the West, butter churns and ice cream manufacturers are actively processing cream. In the East, condensed skim supplies were heavy, but spot loads were limited this week in the West. F.O.B. cream multiples are 1.1500-1.2600 in the East, 1.1400-1.2400 in the Midwest, and 1.0000-1.2100 in the West.

DRY PRODUCTS: Condensed skim processing is active, and availability appears to be steadying. Low/medium heat NDM prices firmed within all series. Dry buttermilk prices are steady to higher, with both demand and trading activity increasing. Dry buttermilk powder production, however, is sporadic as nonfat dry milk has experienced renewed bullishness and its production is prioritized. Dry whole milk prices are unchanged to higher. Availability is light, and dry whole milk production rates may be updated as interests increase. Dry whey prices are steady to higher. With demand surpassing availability, the need for dry whey is overwhelming sticker shock, and some end users have been trading aggressively to secure inventory. Whey protein concentrate 34% prices are holding firm; production is mixed, and interest is reported to be growing. Lactose prices are unchanged, and production is steady. Acid casein prices are up; demand is strong, and supplies are limited. Rennet casein prices firmed, and production schedules are increasing to meet customer demand in the coming months.

INTERNATIONAL DAIRY MARKET NEWS
WESTERN EUROPEAN OVERVIEW: Western European milk production in the primary milk producing countries benefitted from good spring weather, which helped keep seasonal production increasing. Western European dairy manufacturers, especially for cheese, butter and SMP, keep a keen eye on milk production. Those categories would all be interested in higher milk intakes. Seasonal increases help. Sources say that YOY increases would be most welcome as well. EU annual 2020 production of milk delivered to dairies increased 1.6 percent from 2019 production of milk delivered to dairies according to CLAL data made available to USDA. Among some of the top producers, the percentage changes during 2020 compared with 2019 are Germany, +0.3 percent; France, +0.5 percent; Netherlands, +1.1 percent; Italy +4.4 percent; and Ireland +3.8 percent. Calendar year 2020 milk exports from the EU, 1,044,311 MT, increased 8.3 percent from calendar year 2019 according to Eucolait. Many cheese plants are not operating at capacity. Semi hard cheese stocks remain low because filling current demand has edged out some aging stock building. Most extra milk is currently going into cheese. 

EASTERN EUROPEAN OVERVIEW: Comparing calendar year 2020 with calendar year 2019, production of dairy products in Poland was milk deliveries, +2.3 percent; butter, +8.3 percent; cheese, +3.4 percent; WMP, -10.7 percent; and SMP, +5.3 percent. AUSTRALIA: Recent soaking rain in parts of Australia have been welcome. Pasture growth is expected to respond, helping to sustain milk production and reduce the need to supplement feed. Calendar year 2020 milk exports from Australia, 237,249 MT, increased 7.7 percent from calendar year 2019 according to Eucolait. Top 2020 export destinations, quantity exported, and percent of calendar year 2020 exports include China, 91,007 MT, 38.4 percent; Singapore, 45,281 MT, 19.1 percent; and Malaysia, 24,420 MT, 10.3 percent.

NEW ZEALAND: January 2021 New Zealand milksolids reported by DCANZ and CLAL, 212,222 million kg, are up 0.4 percent from January 2020 milksolids, 212,222 million kg., according to Dcanz and CLAL data made available to USDA. January 2021 milk production, 2,474 million MT, is up 0.8 percent from January 2020, 2,454 million MT. Calendar year 2020 milk exports from New Zealand, 231,673 MT, deceased 8.1 percent from calendar year 2019 according to Eucolait. Top 2020 export destinations, quantity exported, and percent of calendar year 2020 exports include China, 162,706 MT, 70.2 percent; Philippines, 22,890 MT, 9.9 percent; and Taiwan, 9,828 MT, 4.2 percent.

SOUTH AMERICAN OVERVIEW: For the start to March, additional rain showers are adding to pasture growth. There are reports milk production is slightly up in parts of southern Brazil, Argentina, and Uruguay. Some dairy operations are decreasing cattle numbers. Market participants report feed prices are affecting cost of milk production. Bottlers are clearing available milk supplies for strong retail demands. Manufacturers are receiving fewer milk loads for dryers. Some chocolate operations have been pushing strong production schedules for their customers’ seasonal demands. Market participants report butterfat demands are healthy in the cream-based dairy markets, especially from ice cream/frozen dessert processors.

NATIONAL RETAIL REPORT (DMN): The most advertised dairy item this week is conventional 48 to 64-ounce containers of ice cream. The national weighted average price is $3.16, up $0.11 from last week. There are no ads for organic 48 to 64-ounce ice cream. Conventional 8 oz. cream cheese has an average price of $2.13, down $0.15 from last week. There are no ads for organic 8 oz. cream cheese. The national weighted average price for conventional half gallon milk is $1.60, unchanged from last week. The national weighted average advertised price for organic half gallons is $4.01, resulting in an organic price premium of $2.41. Organic half gallon milk was the most advertised organic dairy item.

JANUARY AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $17.50 in January, down $2.10 from January 2020. The alfalfa hay price was $171.00 in January, down $2.00 from January 2020. The corn price was $4.24 in January, up $0.45 from January 2020. The soybean price was $10.90 in January, up $2.06 from January 2020. The milk-feed price ratio was 1.98 in January, down 0.44 from January 2020. The index of prices received by farmers for dairy products during the month of January 2021 was down 4.9 to 87.1. Compared to January 2020, the index was down 10.4 (10.7 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in January 2021 was up 0.9 point to 113.1. Compared with January 2020, the index was up 2.2 points (2.0 percent).

JANUARY DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 207 million pounds, 7.0 percent above January 2020, and 0.3 percent above December 2020. American type cheese production totaled 459 million pounds, 5.0 percent above January 2020, but 0.8 percent below December 2020. Total cheese output (excluding cottage cheese) was 1.12 billion pounds, 0.5 percent above January 2020, but 1.2 percent below December 2020. Nonfat dry milk production, for human food, totaled 197 million pounds, 11.7 percent above January 2020, but 4.6 percent below December 2020. Dry whey production, for human food, was 83 million pounds, 0.3 percent above January 2020, and 3.0 percent above December 2020. Ice cream, regular hard production, totaled 55.8 million gallons, 6.9 percent above January 2020, and 7.2 percent above December 2020.

FEBRUARY FINAL CLASS PRICES HIGHLIGHTS (FMMO): The following are the February 2021 class prices under the Federal milk order pricing system and changes from the previous month: Class II: $14.00 ($-0.18), Class III: $15.75 ($-0.29), and Class IV: $13.19 ($-0.56). Under the Federal milk order pricing system, the butterfat price for February 2021 is $1.4376 per pound. Thus, the Class II butterfat price is $1.4446 per pound. The protein and other solids prices for February 2021 are $2.9816 and $0.3161 per pound, respectively. These component prices set the Class III skim milk price at $11.11 per cwt. The February 2021 Class IV skim milk price is $8.45, which is derived from the nonfat solids price of $0.9391 per pound. The product price averages for February 2021 are: butter $1.3586, nonfat dry milk $1.1164, cheese $1.5954, and dry whey $0.5060.