Dairy market news at a glance (March 29 - April 2)

Click here for the complete USDA Dairy Market News for March 22-26

CME GROUP CASH MARKETS (4/2) BUTTER: Grade AA closed at $1.8450. The weekly average for Grade AA is $1.8194 (+0.0994).

CHEESE: Barrels closed at $1.5125 and 40# blocks at $1.7750. The weekly average for barrels is $1.4888 (+0.0408) and blocks, $1.7519 (+0.0389).

NONFAT DRY MILK: Grade A closed at $1.1900. The weekly average for Grade A is $1.1825 (+0.0265).

DRY WHEY: Extra grade dry whey closed at $0.6600. The weekly average for dry whey is $0.6444 (+0.0229).

CHEESE HIGHLIGHTS: Demand notes are mostly consistent throughout the country. Food service sales have noticeably picked up as COVID-19 restrictions ease for restaurants. Western contacts say retail sales have slowed a bit, but exports are hearty. Milk availability remains loose. Spot milk prices in the Midwest were $5 to $4 under Class III. For a comparison, last year's spot milk prices during week 13 were $4 under to $2 over Class. Cheese inventory levels are varied from plant to plant, but production is picking up in light of the food service demand increases. Demand upticks have led some contacts to suggest cheese market tones are steady, with bullish potential.

BUTTER HIGHLIGHTS: Cream availability and butter production schedules vary from region to region. Butter inventories are up year-over-year, and the butter market tone is stable. Retail orders, bolstered by spring holiday cooking and baking, are surpassing expectations. Food service butter demand continues to grow nationwide. Export interest is steady, but some contacts are questioning if higher butter prices could start tarnishing the luster U.S. butter has had recently in international markets.

FLUID MILK: Springtime is here and market participants throughout the nation are noting peak levels of milk are fast approaching, particularly in the Western region. Class I sales are somewhat stabilizing with many school districts wrapping up spring breaks. Cheesemakers are paying from $5 to $4 under Class III for spot milk in the Midwest, although spot milk trading was quieter this week. Cream is slowly tightening in the Midwest and Eastern region, although somewhat plentiful in the West. Butter producers are bidding a bit higher and receiving fewer cream offers as ice cream plants are revving up production rates. Condensed skim demand has begun to improve, as well. Some industry contacts relay condensed skim volumes are in balance and meeting current needs. F.O.B. cream multiples are 1.28-1.40 in the East, 1.23-1.34 in the Midwest, and 1.05- 1.28 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices are mixed. Domestic and international demands are reportedly stable. The low/medium heat NDM market tone has somewhat settled. High heat NDM prices are mixed. Some buyers are purchasing on a wider price range. Market conditions are unsettled. Dry buttermilk prices are fairly steady. Some market participants are purchasing dry buttermilk for their immediate needs. The market tone is sturdy for dry buttermilk. The price range slightly narrowed in the dry whole milk market this week. The dry whole milk market tone is balanced for the near term. Dry whey prices are steady to higher. Both domestic and international demands are strong. The dry whey market tone is firm. Whey protein concentrate 34% prices are steady to higher. The demand for higher protein blends is solid. Lactose prices are mostly steady. Trading activities are fairly moderate. The lactose market holds a stable tone. Prices for acid and rennet casein are steady to a bit lower. Casein markets are generally steady.

INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPEAN OVERVIEW: A report from the European Commission this week projects continuing strength in dairy prices during 2021. The report projects 1 percent growth in EU milk production during 2021. Much of the growth is expected to come from higher per cow yields. Cheese plants are hard at work filling orders. Strong retail demand is coupled with higher than expected food service demand for cheese. The Suez Canal blockage has stalled some export deliveries. This is because cheese on ships is sitting at sea. It is also because delays have slowed ships reaching ports to load cheese for delivery. The opening of the canal is welcome news.

EASTERN EUROPEAN OVERVIEW: January 2021 SMP exports from Belarus, 7,100 MT, decreased 18.2 percent from January 2020, according to CLAL data made available to USDA. The main export destinations January 2021, quantities, and percent change from January 2020, were Russia, 3,361 MT, -18.03 percent; China, 1,045 MT, +161 percent; and Ukraine, 797 MT, +96.38 percent.

OCEANIA DAIRY MARKET OVERVIEW: AUSTRALIA: Australia is drying out from recent once in 100 years floods driven by extremely heavy and sustained rain. The government of Australia had declared natural disasters in parts of New South Wales. Some dairy farms experienced extremely distressing losses, including cows being washed away, helpless, bellowing in fear as flood waters swept them along. Veterinarians have been extremely busy tending to some cows that survived, often treating for hypothermia, pneumonia, cuts and abscesses. Losses are yet to be fully calculated.

NEW ZEALAND: February 2021 New Zealand milksolids reported by DCANZ and CLAL, 172,916 million kg, are up 3.0 percent from February 2020 milksolids, 167,874 million kg., according to DCANZ and CLAL data made available to USDA. February 2021 milk production, 1,932 million MT, is up 3.0 percent from February 2020, 1,875 million MT.

SOUTH AMERICAN OVERVIEW: In Argentina, soybean and corn harvesting is underway. Recent rainfall led to some healthy corn and soybean yields and pasture growth. Dryer weather is anticipated for comfortable harvesting conditions. Manufacturers are currently receiving lower milk loads for dryers. The current holidays bring a slowdown in dairy ingredients on various spot markets. Whole milk powder and skim milk powder market conditions are stable for the near term. In addition, butterfat interests remain are stable from ice cream/ frozen dessert plants.

NATIONAL RETAIL REPORT (DMN): The total number of conventional dairy ads increased this week by 7 percent to 84,620; total organic ads fell by 1 percent to 3,387. The most advertised dairy product was conventional 48-64-ounce ice cream, with an average price of $3.17 up 36 cents over last week. The most advertised organic product this week was gallon-sized milk. The average price was $5.11.

FEBRUARY AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $17.10 in February, down $1.80 from February 2020. The alfalfa hay price was $175.00 in February, up $7.00 from February 2020. The corn price was $4.75 in February, up $0.97 from February 2020. The soybean price was $12.70 in February, up $4.10 from February 2020. The milk-feed price ratio was 1.78 in February, down 0.57 from February 2020. The index of prices received by farmers for dairy products during the month of February 2021 was down 2 to 85.1. Compared to February 2020, the index was down 8.9 (-9.5 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in February 2021 was up 1.4 points to 114.5. Compared with February 2020, the index was up 3.9 points (3.5 percent).

FEBRUARY DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 186 million pounds, 1.3 percent below February 2020, and 11.5 percent below January 2021. American type cheese production totaled 425 million pounds, 1.6 percent above February 2020, but 10.3 percent below January 2021. Total cheese output (excluding cottage cheese) was 1.04 billion pounds, 1.1 percent above February 2020, but 8.1 percent below January 2021. Nonfat dry milk production, for human food, totaled 186 million pounds, 17.1 percent above February 2020, but 5.9 percent below January 2021. Dry whey production, for human food, was 76 million pounds, 1.2 percent above February 2020, but 8.4 percent below January 2021. Ice cream, regular hard production, totaled 55.0 million gallons, 4.7 percent above February 2020, but 3.5 percent below January 2021.

MARCH FINAL CLASS PRICES HIGHLIGHTS (FMMO): The following are the March 2021 class prices under the Federal milk order pricing system and changes from the previous month: Class II: $15.07 ($+1.07), Class III: $16.15 ($+0.40), and Class IV: $14.18 ($+0.99). Under the Federal milk order pricing system, the butterfat price for March 2021 is $1.7176 per pound. Thus, the Class II butterfat price is $1.7246 per pound. The protein and other solids prices for March 2021 are $2.6954 and $0.3652 per pound, respectively. These component prices set the Class III skim milk price at $10.51 per cwt. The March 2021 Class IV skim milk price is $8.46, which is derived from the nonfat solids price of $0.9396 per pound. The product price averages for March 2021 are: butter $1.5898, nonfat dry milk $1.1169, cheese $1.5981, and dry whey $0.5537.