Dairy market news at a glance (May 10-14)

Click here for the complete USDA Dairy Market News for May 10-14

BUTTER: Grade AA closed at $1.8750. The weekly average for Grade AA is $1.8370 (+0.0870).

CHEESE: Barrels closed at $1.7300 and 40# blocks at $1.7250. The weekly average for barrels is $1.7300 (-0.0660) and blocks, $1.7725 (-0.0095).

NONFAT DRY MILK: Grade A closed at $1.3000. The weekly average for Grade A is $1.3125 (-0.0245).

DRY WHEY: Extra grade dry whey closed at $0.6400. The weekly average for dry whey is $0.6320 (-0.0135).

CHEESE HIGHLIGHTS: Milk remains plentiful for cheese producers throughout the nation. Discounted spot milk prices in the Midwest have been consistent throughout the year so far, but offers were reportedly quieter this week. The Midwestern spot milk price range was $2.50 under Class to flat Class. Demand is mixed throughout the country. Food service customers, in some cases, have refilled their once-depleted pipelines. Western contacts report steady export interest from Mexican and Asian customers. Cheese inventories are viewed from balanced to available. Cheese market tones are fluctuating, but market price points are generally viewed as healthy by producers.

BUTTER HIGHLIGHTS: Butter makers across the country are receiving adequate supplies of cream to meet production needs. There is some regional variation, however; cream availability is reported to be tightening in the West, neither tight nor loose in the Central states, and increasingly available in the East. Class II manufacturers continue to siphon off cream volumes ahead of churning operations. Bulk salted and unsalted butter inventories are stable, and some operations are working ahead to grow inventories now for fall demand. Retail orders are lower and seasonally quiet. Food service demand is strong but level in the West and improving in the East and Central regions. Butter market tones are strengthening. Across the country, bulk prices range from 1.0 to 8.0 cents above the market this week.

FLUID MILK: Milk production across the U.S. is mixed. While generally steady, milk output is starting to ease back in the southern areas of the country. Production is still strong in the Pacific Northwest and mountain states. Milk volumes are expected to move readily into manufacturing plants as schools near the end of their terms. Likewise, areas that are nearing the end of the school terms have decreasing Class I demand, while other areas are steady. Cream supplies are widely available, with demand slowing for the churn but increasing for ice cream production. Cream multiples are 1.32 to 1.37 in the East; 1.20 to 1.35 in the Midwest; and 1.05 to 1.38 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk prices are steady to higher, moving up at the bottom of the price range across the country. Contacts say production is active, but availability is limited due to export buying. Prices for high heat nonfat dry milk narrowed in the Central and East but held steady in the West. Dry buttermilk prices were mostly higher this week. Dry buttermilk producers are reporting lighter amounts of buttermilk solids available to dry. Prices for dry whole milk are steady to higher. Dry whey prices stepped lower in the Central region but are mixed elsewhere. Some purchasers have become more hesitant at current price levels. Dry whey inventories are still tight. Prices for whey protein concentrate 34% are steady to higher. Demand is present in domestic and international markets. While the top of the lactose price range moved down a penny, the overall market tone is quite stable. The price ranges for both acid and rennet casein firmed.

INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPEAN OVERVIEW: In the heart of Western European milk production areas, the unusually cold spring has adversely affected pasture growth and the availability of fresh feed for cows. That has led to a lingering slow start to 2021 milk production. Seasonal milk production increases have been noted. But the YOY increases have not been as much as projected when 2021 began. COVID continues to keep more people at home in Germany. With more people at home, demand for fluid milk is higher. Yet when coupled with disappointing YOY milk production increases, milk available for dairy manufacturing is further reduced by this increased consumer demand. The UK is faring better in terms of 2021 milk production than some of the countries across the channel. Sources believe when next released, official data will show UK seasonal milk production through April higher than 2020 through April. Some estimates place the increase at about 1.3 percent. Demand for cheese in Western Europe is increasing.

EASTERN EUROPEAN OVERVIEW: Poland is the largest Eastern European milk producing nation. Poland’s January – March 2020 milk production declined 0.4 percent from January – March 2020 according to CLAL data made available to USDA. January – March 2021 cheese production increased 2.6 percent from January– March 2020.

OCEANIA OVERVIEW: AUSTRALIA: Australian current milk production is near the seasonal low, as the end of the season on June 30 moves closer. Australian law requires dairy processors to announce the new season opening price by June 1 each year. A major Australian dairy cooperative just announced an opening price of 6.55 AUD/kg milk solids. A competing milk processor had already announced an opening price range of 6.40 -6.90 AUD/kg milk solids. January – March 2021 bulk and packaged milk exports from Australia 61,000 MT, increased 24.8 percent from January – March 2020, according to CLAL data made available to USDA.

NEW ZEALAND: New Zealand milk production is near the seasonal low, as the end of the season on May 31 moves closer. With the New Zealand winter moving closer, upward dairy commodity price pressure is expected until milk production increases begin to flow into processing plants. The South Island remains quite dry. Some dairy officials also believe that when released, April milk production data for the South Island will reflect lower YOY milk production. The dry conditions have prompted some dairy producers to dry their cows a bit earlier than normal as the season ends.

SOUTH AMERICA OVERVIEW: Farmers in Brazil and Argentina are working long harvesting days. Throughout the week, rainfall is expected to douse parts of México, alleviating drier weather conditions from previous weeks. WMP and SMP markets are fairly stable for the near term. Market participants report buying demands are soft. Market participants continue to feel some pressure on margins for dairy operators with higher feed costs.

NATIONAL RETAIL REPORT (DMN): Conventional dairy ad numbers decreased 1 percent this week. The most advertised conventional dairy item this week is 48 to 64-ounce containers of ice cream. The national weighted average price is $3.05, down $0.15 from last week. The weighted average advertised price for conventional 8- ounce shred cheese is $2.65, up $0.18 from last week. The conventional 8-ounce block cheese weighted average advertised price is $2.58, up $0.14 from last week. Conventional cheese ad numbers increased 8 percent. The national weighted average price for conventional half gallon milk is $1.38, down from $2.73 last week. The national weighted average advertised price for organic half gallons is $4.16, up from $3.82 last week. This results in an organic price premium of $2.78.

MARCH 2021 ESTIMATED SALES (FMMO): 3.9 billion pounds of packaged fluid milk products were shipped by milk handlers in March 2021. This was 7.5 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 8.0 percent from March 2020 and estimated sales of total organic fluid milk products increased 0.2 percent from a year earlier.

MAY SUPPLY AND DEMAND ESTIMATES(WAOB): Milk production for 2022 is forecast higher than 2021 as continued gains in milk per cow more than offset a slight reduction in the dairy cow herd. Commercial exports on a fat basis are forecast lower as higher domestic butter prices reduce competitiveness in world markets. However, strong global demand and weaker domestic prices for cheese, nonfat dry milk (NDM), and whey are expected to support slightly higher exports on a skim-solids basis. The Class III price is lowered on weaker cheese and whey prices. The 2021 all milk price is forecast at $18.95.

APRIL CONSUMER PRICE INDEX (BLS): The April CPI for all food is 273.1, up 2.4 percent from 2020. The dairy products index is 230.2, up 0.6 percent from a year ago. The following are the April, year to year percentage changes for selected products: fresh whole milk is +4.4; cheese, -0.3; and butter, -0.6.

APRIL PRODUCER PRICE INDEX (BLS): The April PPI for all food is 218.0, up 8.1 percent from 2020. The dairy products index is 206.8, up 6.3 percent from a year ago. The following are the April, year to year percentage changes for selected products: fresh whole milk is - 1.4; cheese, +9.2; and butter, +56.0.