National Dairy Market at a Glance

     Dairy Markets at a Glance

     Report 28 - Released on July 12, 2019

     BUTTER: Grade AA closed at $2.4125. The weekly average for Grade AA is $2.4035 (-.0015).
     CHEESE: Barrels closed at $1.7400 and 40# blocks at $1.7850. The weekly average for barrels
     is $1.7610 (-.0190) and blocks, $1.8250
     NONFAT DRY MILK: Grade A closed at $1.0275. The weekly average for Grade A is $1.0345
     DRY WHEY: Extra grade dry whey closed at $.3225. The weekly average for dry whey is $.3225
          CHEESE HIGHLIGHTS: Nationwide, industry contacts suggest that while milk supplies may
     be tightening somewhat, cheese vats are getting filled. Milk loads are readily available for
     making cheese. In the Midwest, holiday spot milk offers were less available than in previous
     years, and $2 under to $1 over Class are normal prices for spot loads. As a comparison, spot
     milk prices last year were $3 under to $.50 over Class III. Cheese production is active, and
     many processors want to stay ahead of late season demand. Current domestic demand is steady
     to higher for cheddar and Swiss cheese, in part due to grilling season. In addition, a few
     contacts relay they have seen an increase in food service demand. However, with stronger
     domestic prices, it has become harder to attract more international buyers aside from
     contractual sales. Cheese inventories are adequate to meet most buyer needs. According to
     some contacts, there is a lot of mozzarella in western warehouses.
          BUTTER HIGHLIGHTS: Nationwide, butter production has declined, which is typical after
     last week's shortened-holiday week. Class II processors, particularly ice cream makers,
     continue pulling strong on cream, restricting churning schedules for some butter makers. In
     some instances, microfixing is the main output method to produce print butter, especially in
     the Central region. Bulk/print butter demands from retailers, wholesalers, and food service
     are reported as fair/good across all regions of the country.
          FLUID MILK: Milk production is strong in the Pacific Northwest while it is mixed in the
     mountain states of Idaho, Utah, and Colorado. In other parts of the U.S., milk output is
     steady to decreasing. Component levels have declined in some western states as well. Milk
     supplies vary between balanced, not enough, and plentiful depending on the areas. In Idaho,
     discounted distressed loads were available to buyers whereas some eastern and western
     processing plants were being run below capacities. Class I demand is flat to trending up
     across the country, while Class III sales increased in the West. Cream is available, and
     cream multiples for all classes are either steady or increasing. They range 1.28-1.35 in
     the East, 1.22-1.32 in the Midwest, and 1.15-1.31 in the West. Condensed skim supplies are
     growing in the East. In the West, inventories are enough to satisfy buying interests.
          DRY PRODUCTS: Low/medium heat nonfat dry milk prices have declined. Spot trades are
     infrequent in the Central and East, whereas in the West they are livelier this week compared
     to the previous week. Low/medium heat nonfat dry milk supplies are abundant for fulfilling
     customers' needs. Production is active. High heat nonfat dry milk prices are steady in the
     East and Central, but declined at the top of the range in the West. Stocks are variable
     based on the region. Dry buttermilk prices are the same as the week before. Supplies for
     spot needs are hardly accessible. The manufacturing of dry buttermilk is seldom done because
     processing schedules are in favor of nonfat dry milk. Dry buttermilk requests from bakers
     are solid in the West. In the Central, there is more demand for less than loads (LTL). Dry
     whole milk prices have climbed at the top of the range, partly due to the trading of special
     brands. The increase is also the result of less condensed whole milk drying and higher
     butterfat values. Dry whole milk domestic sales picked up this week. Price differentials
     between international and domestic dry whole milk give a competitive disadvantage to the
     U.S. export market. Nationwide, dry whey prices are unchanged to down. Market demand is
     generally quiet and based on contracts. Supplies are available to buyers, but they don't
     have the urgency of purchasing more products aside from filling current needs. Dry whey
     production is ongoing. Whey protein concentrate 34% prices are stable to down. Inventories
     for special brands are tighter as contractual sales deplete stocks. Spot sales remain slow,
     while production is flat. Market conditions are in good equilibrium. Lactose contractual
     prices are higher than spot market prices. Generally, prices are a bit down this week. The
     African swine fever and trade issues continue to play a major role in market demand. Lactose
     production is level. Rennet and Acid casein prices are flat. Most purchasers have contracted

     what they need for Q3 and some for Q4. Casein output is low in New Zealand, but it is
     expected to increase by late July into early August.
          ORGANIC DAIRY MARKET NEWS: Federal Milk Market Order 1, in New England, reports the
     utilization of types of organic milk by pool plants. During May 2019, organic whole milk
     utilization totaled 15.3 million pounds, down slightly from 15.5 million pounds one year
     earlier. May's 2019 butterfat content was 3.28 percent, lower than the 3.29 of the previous
     year. Organic reduced fat milk utilization for May this year, nearly 17.0 million pounds,
     plunged from the 22.8 million pounds one year earlier. The butterfat content was 1.40
     percent, well above the 1.29 percent last year. The July 2019 farm gate organic milk pay
     price of a national organic dairy cooperative is $27.13. Across the country, organic retail
     advertisements grew at a 66 percent rate. In doing so, organic milk ads for all package
     sizes climbed 176 percent over the last retail survey period. The organic price premium for
     half gallon milk is $1.65, down 97 cents from last week. Meanwhile, organic yogurt ad
     numbers declined 34 percent, linked to a 30 percent drop in 4-6 ounce container size and 17
      percent drop in 32 ounce size. Organic cheese ads also declined, 67 percent.
          NATIONAL RETAIL REPORT (DMN): Conventional dairy retail ad numbers increased 3 percent
     this week. Organic dairy ad numbers grew 66 percent. Conventional dairy ads represented 93
     percent of all retail dairy ads. Conventional ice cream 48-64 oz. containers continue as the
     most advertised product/category, but ad numbers dipped 14 percent. The national weighted
     average advertised price for conventional milk half gallons is $2.17, compared to $3.82 for
     organic milk half gallons, an organic price premium of $1.65. Conventional cheese ads rose
     4 percent, but organic cheese ads declined 67 Percent. Conventional yogurt ad numbers
     increased 40 percent. Organic yogurt ads dropped 34 percent. The weighted average advertised
     price for conventional yogurt in 4 to 6 oz.
          JUNE CONSUMER PRICE INDEX (BLS): The Consumer Price Index (CPI) for the all food
     category is 258.1, up 1.9 percent from 2018. The dairy products index is 217.4, up 0.6
     percent from a year ago. The following are the June 2018 to June 2019 changes for selected
     products: fresh whole milk is +2.7 percent; cheese, -1.2 percent; and butter, +0.8 percent.
          JULY SUPPLY AND DEMAND ESTIMATES (USDA, WAOB): The milk production forecast for 2019
     is unchanged, but the forecast for 2020 is reduced on slower expected growth in milk per
     cow.  USDA�s Cattle report, to be released on July 19th, will provide a mid-year estimate of
     the dairy cow inventory and producer intentions regarding retention of heifers for dairy cow
     replacement. The 2019 Class III price is raised as the higher cheese price more than offsets
     a lower whey price, and the Class IV price is raised as a higher NDM price more than offsets
     the lower butter price. The 2020 Class III price forecast is unchanged as the fractionally
     higher cheese price is offset by a lower whey price. The Class IV price forecast reflects a
     lower butter price. The 2019 all milk price is forecast higher at $18.20 per cwt, but the
     all milk price forecast for 2020 is slightly lower than the previous month at $18.85.

     Information for the period July 8 - 12, 2019, issued weekly

     Published by:
     Dairy Market News - Madison, WI
     FLORENCE KONE-GONZALEZ, (608)422-8594

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