Dairy market news at a glance (March 8-12)

View the complete USDA Dairy Market News for March 8-12

BUTTER: Grade AA closed at $1.7150. The weekly average for Grade AA is $1.7005 (+0.0190).

CHEESE: Barrels closed at $1.5525 and 40# blocks at $1.7900. The weekly average for barrels is $1.5220 (+0.0755) and blocks, $1.7635 (+0.0980).

NONFAT DRY MILK: Grade A closed at $1.1700. The weekly average for Grade A is $1.1715 (+0.0025).

DRY WHEY: Extra grade dry whey closed at $0.5925. The weekly average for dry whey is $0.5935 (+0.0240).

CHEESE HIGHLIGHTS: Some cheesemakers are experiencing a busy demand push, as market prices continue to edge higher. States loosening COVID-19 restrictions has aided in bolstering food service sales. Still, inventories have reportedly grown some in the West and Midwest. Spot milk prices ($2 under to flat Class III) were reported this week. This week marks the first of the year with an undiscounted spot milk price being reported. Last year, spot milk prices were $4 to $2 under Class. As contacts suggest spring flush has arrived in the Western area and is trickling into the Midwest, availability of milk could shift higher. Cheese market tones are currently finding some bullish footing.

BUTTER HIGHLIGHTS: Butter market tones are steadying after last week’s upswing following the new crop rule on the CME. Butter inventories are heavy, but industry contacts anticipate reducing butter stocks over the next few months as export and domestic demand are both growing. Retailers are placing substantial orders to support upcoming spring holiday butter promotions. Food service demand is beginning to pull a little stronger as dine-in restrictions relax, and butter producers are hopeful that this is a trend that will continue.

FLUID MILK: Spring flush levels of milk are being reported in the West, especially in California. Midwestern and Eastern reports are showing similar patterns. In the southern portion of the country affected by the winter storms from mid-February, milk yields have begun to grow again, although more culling is being reported. Contacts suggest this is likely due to the health detriments caused by the freezing weather. Bottling demand grew in the south central and southeast, as outlets in that region continue to refill pipelines. Bottling demand was steady or lower in the rest of the nation. Cream demand is growing nationwide, as manufacturers plan for the spring push. Condensed skim volumes are mixed, but more contacts report growing/available loads. F.O.B. cream multiples are 1.17-1.26 in the East, 1.17-1.25 in the Midwest, and 1.05-1.28 in the West.

DRY PRODUCTS: Spring has come early for market bulls on dairy powders. Low/medium heat nonfat dry milk (NDM) prices moved higher in all regions. Export demand continues to keep prices buoyed, even as some end users report steady availability domestically. Western dry buttermilk prices moved higher, while the Central/East price range slightly decreased on the top of the range. Dry whole milk prices continued their move higher, as international whole milk powder market tones ring bullishly. Dry whey also remains in a bullish position, as prices moved higher nationwide. Like NDM, export interests are keeping domestic end users busy to lock in loads. Whey protein concentrate 34% prices also shifted higher, as processors say customer interests remain active. Lactose producers and buyers are working through Q2 and FY2021 contracts, as prices bumped up slightly this week. Strong demand for acid and rennet casein provided firming prices in those markets.

ORGANIC DAIRY MARKET NEWS: Organic Milk Product Sales. The Agricultural Marketing Service (AMS) reports revised estimated US sales of total organic milk products for December 2020 were 253 million pounds, up 8.9 percent from December 2019, and up 10.4 percent year-to-date. Organic whole milk sales for December 2020, totaled 114 million pounds, up 10.6 percent compared to a year earlier, and up 11.5 percent compared with year-to-date 2019. Reduced fat milk (2%) sales were 85 million pounds, up 10.6 percent from the previous year and up 14.9 percent year-to-date. National Organic Grain and Feed Markets. The current demand for organic feed grade corn and soybeans is stable. In addition, trading activities are good. There are reports organic feed grade corn traded 4 cents lower FOB this trading period. Organic feed grade soybeans traded $1.09 higher FOB compared to the previous reporting period. Spot trading activities were fairly active, driven by limited imports from India for organic soybeans and soybean meal. Trading activity and market trends are inactive on all other organic grains at this time.

NATIONAL RETAIL REPORT (DMN): Total dairy advertisements were down this week across both conventional and organic items. Conventional advertisements dropped by 6% while organic advertisements fell by 21%. In the conventional aisle the greatest increase in ads came from gallon milk at 73%. Organic 8- ounce shredded cheese led the pack with an increase of 206%. Organic 32-ounce yogurt increased by 161% week-over-week.

MARCH SUPPLY AND DEMAND ESTIMATES (WASDE): The 2020 milk production estimate is adjusted to reflect recent data revisions. For 2021, the milk production forecast is lowered slightly from last month as a higher expected cow inventory is more than offset by slower growth in milk per cow. The 2021 fat basis import forecast is reduced on lower expected imports of butterfat; fat basis exports are raised as higher shipments of butterfat more than offset lower forecast cheese exports. On a skim-solids basis, the import forecast is unchanged due to offsetting changes in imports of a number of dairy products while the export forecast is lowered, reflecting expectations of lower lactose shipments which are partly offset by higher exports of skim/nonfat milk powder.

FEBRUARY CONSUMER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food category is 271.4, up 3.6 percent from 2020. The dairy products index is 230.5, up 2.7 percent from a year ago. The following are the February 2020 to February 2021 changes for selected products: fresh whole milk is +3.0 percent; cheese, +2.8 percent; and butter is unchanged.

FEBRUARY PRODUCER PRICE INDEX (BLS): In February 2021, the Producer Price Index (PPI) for the all food manufacturing is 209.1, up 4.1 percent from 2020. The PPI index for manufactured dairy products is 200.0, down -2.2 percent from a year ago. The following are the February 2020 to February 2021 changes for selected products: fresh whole milk is -3.7 percent; cheese, -1.4 percent; butter, -28.1 percent; and dry milk products and mixtures, up 10.2 percent.

REVISED DECEMBER 2020 MILK SALES (FMMO): Total fluid products sales 4.0 billion pounds of packaged fluid milk products were shipped by milk handlers in December 2020. This was 1.5 percent higher than a year earlier. Estimated sales of total conventional fluid milk products increased 1.1 percent from December 2019 and estimated sales of total organic fluid milk products increased 8.9 percent from a year earlier.