Dairy market news at a glance (March 15-19)

Click here for the complete USDA Dairy Market News for March 15-19

BUTTER: Grade AA closed at $1.6650. The weekly average for Grade AA is $1.7020 (+0.0015).

CHEESE: Barrels closed at $1.4525 and 40# blocks at $1.7900. The weekly average for barrels is $1.5080 (-0.0140) and blocks, $1.7980 (+0.0345).

NONFAT DRY MILK: Grade A closed at $1.1525. The weekly average for Grade A is $1.1665 (-0.0050).

DRY WHEY: Extra grade dry whey closed at $0.6125. The weekly average for dry whey is $0.6045 (+0.0110).

CHEESE HIGHLIGHTS: Cheese demand reports are mixed, as food service demands have begun to reenter the fray after a yearlong hiatus. Curd producers in the Midwest suggest the easing of restrictions in areas of the country was helpful, but curd sales have now stalled slightly. Western contacts suggest cheese sales have grown on the food service side, as retail sales have edged back. Cheese production is generally active, minus some plants updating ahead of increasing milk availability. Spot milk sales in the Midwest ranged from $1 to $5 under Class, comparable to last year's $2 to $5 under. Spot milk prices last week were from $2 under to flat Class, which apparently did not trend into week 11. In fact, cheesemakers reported an increase in the volume of spot milk offers. Cheese market tones have held some stability on the block side, while barrels faltered midweek, growing the price gap to over $.30 on Thursday.

BUTTER HIGHLIGHTS: Cream abounds in the West, but supplies in the Central and East regions are beginning to tighten. Butter churning is ongoing nationwide, and levels of operation vary with regional cream availability. With that said, butter inventories are heavy; fresh butter is plentiful, and contacts also report receiving orders for old crop butter. Export interest is stable. Retail demand is strong in advance of spring holidays. Food service sales continue to rise slightly, with some producers seeing butter orders nearing preCOVID levels. This positive food service demand correlates with positive market tones over the last few weeks.

FLUID MILK: Milk production across much of the U.S. is steady to higher. In the far southeastern and southwestern parts of the country, milk production is at or near peak volumes. In the south-central part of the U.S., industry contacts are wondering what flush will look like following the frigid temperatures last month and the impacts they may have had on the milking herd. Class I demand has eased back as some fluid milk pipelines get refilled and some schools take their spring breaks. However, some contacts suggest fluid sales are strong and ahead of pre-pandemic levels. Although a lot of cream is available, cream supplies have tightened slightly, especially in the eastern half of the U.S. where a few butter makers suggest they could use a bit more cream. Contacts relay Class II cream usage has picked up. Cream multiples are 1.20-1.32 in the East, 1.20-1.27 in the Midwest, and 1.05- 1.24 in the West.

DRY PRODUCTS: Prices for low heat nonfat dry milk (NDM) moved higher. Condensed skim availability is mixed and seems to be getting tighter in the East. High heat NDM prices are steady to higher. Dry buttermilk prices are mixed. Prices are higher in the East and Central regions, but a few trades of loads produced in the second half of 2020 moved the needle lower in the West. As processors focus production schedules on low heat NDM, dry buttermilk and other milk powders are competing for dryer time. Dry whole milk prices are steady to higher. Prices for dry whey continue to move higher. Inventories are tight and there is a healthy demand in domestic and export markets. However, there are still challenges with port congestion and access to shipping equipment. Whey protein concentrate 34% prices are steady to higher, and inventories are tight. Lactose prices are stable. Spot prices and Q2 contracts seem to be settling into a range. Prices for acid casein are steady to higher and rennet casein prices moved upwards. Early 2021 casein buying interest has been steady and strong.

INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPEAN OVERVIEW: In the primary milk producing countries, Germany, France, and Netherlands, milk production for the last several months has struggled to equal or exceed monthly YOY production. Dairy experts in Western Europe say a continuing challenge is fewer cows, resulting from older dairy producers retiring, with no family members taking over farming. Some other countries have good YOY milk production increases. At this time in March, observers say that dairy producers could boost output but are holding back because of higher feed costs. That, coupled with current milk pay prices, have constrained production increases. There is hope that in coming months as pasturing becomes more of an option, that milk production will yield positive YOY results for Western Europe as an entity.

EASTERN EUROPE OVERVIEW: Eastern European milk production expansion has slowed. Poland has typically led Eastern European milk production increases but is now generating lower production increases. Other Eastern European states are below year ago production trends. Lower milk pay prices and squeezed margins are cited.

OCEANIA DAIRY MARKET OVERVIEW: Australia is approaching the end of summer. Feed prices are lower than a year ago, which is expected to help producer margins. Dairy producer confidence seems higher. July 2020 - January 2021 seasonal milk production in Australia, increased 0.7 percent from July - December 2019, according to Dairy Australia. Milk exports from Australia July 2020 – January 2021, 167,048 MT, increased 16.3 percent from July 2019 – January 2020 according to Dairy Australia. This market segment has been increasing rapidly, driven by sales to China in particular. New Zealand sources are pleased that a large New Zealand dairy cooperative has increased the seasonal milk pay price forecast to $7.30 - $7.90 Australian dollars per kilogram of milk solids, up 40 Australian cents. In addition, for the first half of the current fiscal year, earnings from business with China increased by one third, offsetting drops in North America and Europe related transactions. A New Zealand dairy organization commissioned study recently found that New Zealand milk production ranks as the most efficient producer of low emissions milk among major global dairy producing countries.

SOUTH AMERICA OVERVIEW: Weather conditions are fairly comfortable in parts of Brazil, Argentina, and Uruguay. Additional rain showers are adding to pasture growth. There are reports milk production is slightly up. Manufacturers are currently receiving lower milk loads for dryers. Confectionary operations are pushing strong production schedules for their customers’ seasonal demands. In addition, butterfat demands are strong from ice cream/frozen dessert processors.

NATIONAL RETAIL REPORT (DMN): Total dairy advertisements increased this week. Conventional advertisements increased by 7 percent while organic advertisements grew by 4 percent. This week, the total number of conventional milk advertisements rose 78 percent. The total number of organic milk advertisements decreased 20 percent. The weighted average price for conventional half gallon milk was $1.11, while the weighted average price for organic half gallons was $3.15. At almost three times the price per half gallon, the organic premium was $2.04, an increase of $0.69 over last week. Mid-month celebrations helped usher in a 50 percent increase in advertisements for conventional flavored milk half gallons, as well as a price decrease of $0.96 down to $2.40.

FEBRUARY 2021 MILK PRODUCTION (NASS): Milk production in the 24 major States during February totaled 16.8 billion pounds, down 1.3 percent from February 2020. However, production was 2.3 percent above last year after adjusting for the leap year. January revised production, at 18.4 billion pounds, was up 2.6 percent from January 2020. The January revision represented an increase of 150 million pounds or 0.8 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 1,882 pounds for February, 44 pounds below February 2020. The number of milk cows on farms in the 24 major States was 8.94 million head, 88,000 head more than February 2020, and 2,000 head more than January 2021.

JANUARY 2021 MILK SALES (FMMO): Total Fluid Products Sales 3.9 billion pounds of packaged fluid milk products were shipped by milk handlers in January 2021. This was 4.9 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 5.7 percent from January 2020 and estimated sales of total organic fluid milk products increased 8.1 percent from a year earlier.

APRIL ADVANCED CLASS PRICES BY ORDER (FMMO): The base Class I price for April 2021 is $15.51 per cwt, an increase of $0.31 per cwt when compared to March 2021. A Class I differential for each order's principle pricing point (county) is added to the base price to determine the Class I Price. For April 2021, the advanced Class IV skim milk pricing factor is $8.33 per cwt, the Class II skim milk price is $9.03 per cwt, and the Class II nonfat solids price is $1.0033 per pound. The two-week product price averages for April 2021 are: butter $1.5534, nonfat dry milk $1.1024, cheese $1.5599, and dry whey $0.5394.