Source: USDA
CME GROUP CASH MARKETS (11/6) BUTTER: Grade AA closed at $1.4300. The weekly average for Grade AA is $1.4280 (+0.0180).
CHEESE: Barrels closed at $2.3175 and 40# blocks at $2.3425. The weekly average for barrels is $2.4710 (-0.0045) and blocks, $2.5970 (-0.1775).
NONFAT DRY MILK: Grade A closed at $1.0650. The weekly average for Grade A is $1.0705 (-0.0205). DRY WHEY: Extra grade dry whey closed at $0.4225. The weekly average for dry whey is $0.4190 (+0.0230).
CHEESE HIGHLIGHTS: The second big runup of the year on cheese block market prices has, at least this week, begun to show signs of an end. Prices have dropped nearly $.30 from Monday to Thursday, coming down to meet barrel prices hovering just under $2.50. Market contacts, both on the production side and on the buying side, have expected some comedown, as buyers have been using the hand-tomouth tactic in recent weeks on some varieties. As producers report plentiful milk both in-house and spot offerings, their production rates have begun to subside in order to limit potential inventory excesses. Hence, the spot milk price range dropped on the low end ($2 under to Class III), while offers are reportedly at $3 and $4 under Class in the Midwest. Another hurdle cheesemakers reported were COVID-19 related staffing shortages. Recently firm cheese market tones are in question.
BUTTER HIGHLIGHTS: Depending on cream availability in each region, butter production is generally ongoing, ahead of the yearend holiday’s needs. Cream-based holiday favorites such as eggnog, cream cheese, whips, and dips, continue pulling strong on cream volumes, in some instances, limiting churning in some balancing plants across the country. Nevertheless, micro-fixing bulk supplies continues to balance customers’ print orders at the retail level. Buyers’ inquiries for Q1 contracts continue to come on across in some regions. This week, bulk butter pricing varies by regions: East, 2.0 cents to 7.0 cents over the market; Central, 0.0 cent to 5.0 cents above the market; West, 2.0 cents to 7.5 cents over the market, with various periods and averages used.
FLUID MILK: Across the nation, farm milk output is being/has been affected by uncommon weather activity. In the East, Tropical Storm Eta has the potential to disrupt production, hauling and fields. Last week’s South Central area ice storms put a pinch on production plants with power outages, created road closures and could have some impact on crop health. Still, weekly milk yields in the Midwest, East, and most of the West are steady to higher. Contacts say bottling demand is up and down and varies from state to state. However, this week most industry participants are reporting a slight uptick in orders. Cheese producers reported plentiful contracted and spot milk. Spot milk prices were reported from $2 under Class to flat Class. Condensed skim milk volumes continue clearing heavily to ice cream and NDM manufacturing. Cream is growing in availability in the Midwest, remains plentiful in the West, and remained somewhat steady in the East. F.O.B. cream multiples are 1.30-1.45 in the East, 1.18-1.35 in the Midwest, and 1.05-1.28 in the West.
DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) prices trended downward in all regions. NDM market upticks have slowed in recent weeks as buyers are holding out for potential further drops. On the other hand, buttermilk powder prices are trending northerly in a late seasonal push. The dry whole milk price range narrowed on uncertain market tones. Dry whey prices continued an upward trajectory in all regions, as buyers are busy fulfilling end-ofyear needs. Whey protein concentrate 34% prices mirrored those of sweet whey powder and shifted up. The lactose price range is unchanged, but the mostly series slipped on active trading. Acid and rennet casein prices remained steady, as stocks are reportedly comfortable.
INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN EUROPE: An experienced European dairy analyst characterizes current dairy markets there as being super boring. Most price movements are viewed as sideways market movements with little trend setting significance. Milk production in the EU January – August 2020 increased 1.8 percent from January – August 2019 according to CLAL data made available to USDA. EASTERN EUROPE: Ukraine exports of primary dairy products January – August 2020 were below January – August 2019. Results include butter, -46.1 percent; SMP, -30.9 percent; WMP, -61.1 percent; and cheese, -18.1 percent, according to CLAL data made available to USDA. OCEANIA OVERVIEW: AUSTRALIA: A sense of optimism continues to encourage dairy producers in Australia. Many pastures do not seem as dry as last year. More dairy producers are able to grow hay than last year. Hay prices are also lower, benefitting producers who purchase hay. NEW ZEALAND: September 2020 New Zealand milksolids reported by DCANZ, 224.952 million kg, nearly double August 2020, are up 1.8 percent from September 2019 milksolids, 220.982 million kg. September 2020 milk production, 2.708 million MT, nearly double August 2020 2020, is up 1.7 percent from September 2019, 2.664 million MT. SOUTH AMERICA OVERVIEW: Farm milk production has generally stagnated after peaking over the past couple of weeks in the main dairy basins of South America, particularly in Argentina, Uruguay, Paraguay, Chile, and southeastern Brazil. Scattered showers have relieved dry conditions in the south region of the continent. As noted by some contacts, these rains are helping to boost forage quality on several dairy farms.
NATIONAL RETAIL REPORT (DMN): This week, conventional retail ad numbers were unchanged, while organic retail ad numbers increased 57 percent. The most advertised dairy item was 48 to 64- ounce conventional ice cream with a weighted average advertised price of $2.90. Total conventional cheese ads decreased 1 percent, while no ads for organic cheese were reported. Conventional yogurt ads increased 17 percent, while organic ads decreased 25 percent. Milk in half gallon containers was the most advertised organic dairy item. The national weighted average advertised price for organic half gallons is $3.70, down 23 cents from last week.
SEPTEMBER AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $17.90 in September, down $1.40 from September 2019. The milk-feed price ratio was 2.28 in September, down 0.06 from September 2019. The index of prices received by farmers for dairy products during the month of September 2020 was down 4.4 to 89.1.
SEPTEMBER DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 152 million pounds, 5.4 percent above September 2019, and 0.3 percent above August 2020. American type cheese production totaled 432 million pounds, 4.0 percent above September 2019, but 3.3 percent below August 2020. Total cheese output (excluding cottage cheese) was 1.09 billion pounds, 1.1 percent above September 2019, and 0.6 percent above August 2020. Nonfat dry milk production, for human food, totaled 124 million pounds, 5.5 percent above September 2019, but 13.8 percent below August 2020. Dry whey production, for human food, was 74 million pounds, 17.9 percent below September 2019, and 4.9 percent below August 2020. Ice cream, regular hard production, totaled 63.4 million gallons, 9.1 percent above September 2019, but 8.1 percent below August 2020.
OCTOBER FINAL CLASS PRICES HIGHLIGHTS (FMMO): The following are the October 2020 class prices under the Federal milk order pricing system and changes from the previous month: Class II: $13.63 ($+0.47), Class III: $21.61 ($+5.18), and Class IV: $13.47 ($+0.72). Under the Federal milk order pricing system, the butterfat price for October 2020 is $1.6388 per pound. Thus, the Class II butterfat price is $1.6458 per pound. The protein and other solids prices for October 2020 are $5.0146 and $0.1534 per pound, respectively. These component prices set the Class III skim milk price at $16.45 per cwt. The October 2020 Class IV skim milk price is $8.01, which is derived from the nonfat solids price of $0.8902 per pound. The product price averages for October 2020 are butter $1.5248, nonfat dry milk $1.0670, cheese $2.2921, and dry whey $0.3480.
