May 14th - May 18th, 2012: Dairy Market News at a Glance

BUTTER HIGHLIGHTS: Late last week at the CME Group Cash trading sessions and continuing for much of the current week, the cash price firmed to close the week at $1.3550. To the surprise of many butter producers and handlers, this strength is occurring at a time when butter production is seasonally strong and inventories are building. Cream volumes available to the churn remain seasonally heavy, although some butter producers are reporting lighter surplus cream offerings than in recent weeks. Lighter surplus offerings are being attributed to increased Class II demand, especially for ice cream and mix needs. Although lighter surplus cream offerings are occurring, many butter producers are anticipating heavier volumes within the week as the Memorial Day holiday weekend approaches which usually generates additional cream volumes for the churn. Typically, many Class II operations reduce their holiday weekend runs and divert cream volumes, which end up in churns from coast to coast. Overall butter demand is fair with some producers and handlers reporting good butter movement. Retail print ads are featuring butter promotions in many regions of the country, which typically clear good volumes of print butter. The Cooperatives Working Together (CWT) program continues to accept butter and anhydrous milk fat export assistance requests. During the week, the program announced that they recently accepted requests totaling nearly 1.5 million pounds (663 MT). Thus far in 2012, CWT has assisted with exports of 42.8 million pounds. 

CHEESE HIGHLIGHTS: Milk supplies across the country remain above year ago levels and much of that milk is finding its way to cheese plants. Discounts are being offered to plants to encourage higher production levels for cheese. Stocks of cheese are increased from a year ago. Cheese plants are keeping a close eye on inventories as demand is described as moderate. Increased features in retail advertising are helping to move additional supplies. Export sales are being aided with the assistance of the Cooperative Working Together program. Trading at the CME Group this week has been uneventful with light activity from both manufacturers and buyers. Barrel prices are up one cent from last Friday, closing at $1.4600 for the week, while blocks are unchanged from last Friday at $1.5000. 

DRY PRODUCTS: For most dry dairy product markets, the market tone is unsettled to weak and prices are trending lower. Nonfat dry milk powder markets are mixed as market participants weigh the news of a possible NDM sale to the export market clearing substantial quantities of NDM. NDM production across the country varies as milk intakes maintain high levels in some regions, while declining in others. Buttermilk powder markets are generally weak as prices trend lower. Powder production is seasonally active, although condensed sales into Class II operations are reportedly increasing seasonally. Often, recent price declines have prompted potential buyers to purchase for immediate needs only, unwilling to expand their inventories with the prospect of further price declines. Buttermilk powder inventories are building seasonally. Whey powder markets are mixed, although a steadier undertone is developing. Prices unchanged to lower. Cheese production across the country is seasonally strong, but reports of declining milk volumes are becoming evident in slightly lower cheese output for some. Whey powder demand is improving, especially for Class II needs which is tightening available supplies. Lactose markets are generally steady with prices unchanged to slightly lower as spot sales activity increases. Buyers and manufacturers are working on agreements for Q3 contracts. Lactose production is generally steady with stock availability varying from manufacturer to manufacturer.

May 7th - May 11th, 2012: Dairy Market News at a Glance

BUTTER HIGHLIGHTS: During the week, the CME cash butter price dipped to the lowest level ($1.3000) since October 2009, but firmed to $1.3200 by weeks' end. Butter producers and handlers are indicating that churning schedules are seasonally strong. Cream offerings to the churn remain plentiful. Many butter producers are stating that cream offerings are surpassing their capacity. Current churning is generating butter stocks that are outpacing demand, thus clearances to inventory are occurring. In many instances, butter producers are generating bulk versus print, especially if they know the end location at this time is inventory. Butter demand is fair at best. Most orders being placed are for short term or immediate needs, with minimal longer term orders being negotiated and finalized. Cooperatives Working Together (CWT) continues to accept butter export assistance requests and during the week announced that they recently accepted requests totaling nearly 518,086 pounds (235 MT), the lightest weekly acceptances thus far this year. Thus far in 2012, CWT has assisted with exports of 41.3 million pounds. 

CHEESE HIGHLIGHTS: Cheese production levels remain high as milk looks to find a home away from Class IV production. Discounts are being offered to prompt cheese plants to take on extra milk. Cheese plants are cautious without the discounts to build inventories. Domestic sales are moderate as some buyers are waiting to see if prices will go lower before committing to added purchases. Export sales remain above year ago aided in part by CWT assistance. Cash trading at the CME Group this week has been mostly lower, but firmed slightly by weeks' end with the bulk of the activity taking place in barrels. There were moderate sales of 14 loads of barrels with only 3 sales of blocks for the week. Barrels closed Friday at $1.4500, while blocks closed at $1.5000.

DRY PRODUCTS: Central nonfat dry milk prices are unchanged to lower on a continued weak market. Eastern NDM production schedules remain very active, leading to building inventories which keeps downward pressure on prices. Western low/medium heat NDM milk prices moved lower on light trading, with a weak undertone. Central dry buttermilk prices are unchanged to lower. Eastern dry buttermilk inventories are increasing and putting significant pressure on prices. In the west, dry buttermilk prices trend lower and the market tone remains weak in light trading. A decrease in the market values of nonfat solids and butterfat exerted pressure on the low end of the dry whole milk spot market. Central dry whey prices on the mostly series are unchanged for the week while the top of the range decreased by one cent. Current dry whey production in the Northeast is expanding inventories and keeping downward pressure on prices. Western dry whey prices are mostly steady with the top of the range lower as contract prices adjust. The whey protein concentrate 34% market is unchanged to lower on the range as some contract prices adjusted to variable bases. The lactose market is unchanged on a steady market. Casein markets remain weak with prices generally holding steady.

April 23rd - April 27th, 2012: Dairy Market News at a Glance

BUTTER HIGHLIGHTS: The CME Group cash butter price dipped under the $1.40 level for the first time since February 2010 and closed the week at $1.3600. This weekly close compares to $1.4175 last Friday, $1.5225 a month ago, and $2.0150 a year ago. Churning schedules across the country remain seasonally strong as cream supplies are readily available. In most instances, current churning is surpassing demand, thus clearances to inventory are strong. Butter producers and handlers are indicating that buying interest is fair at best with most buyers cautious with their purchases and procuring for near term needs. Retailers are stating that butter feature activity has slowed significantly since the recent holiday period and overall butter demand is typical for this time of the year. Food service buyers are reporting fairly steady needs as traffic flow through restaurants is holding steady at fairly good levels. Cooperatives Working Together (CWT) accepted butter export assistance requests totaling 750,000 pounds (341 MT). This week, the CWT program announced that beginning May 7th; the program will begin accepting requests for export assistance for anhydrous milk fat. Thus far in 2012, CWT has assisted member cooperatives in making butter export sales totaling 39.2 million pounds. 

CHEESE HIGHLIGHTS: Cheese production across the country is robust. Milk supplies are up and much of that production is finding its way to cheese plants. Excess milk volumes are often being discounted to encourage additional cheese manufacturing. Cheese inventories are building and this is reflected in the March Cold Storage report. NASS reported stocks of natural cheese in cold storage, 2% above the previous month’s volume. At the CME Group this week, cheese trading was active. Barrel prices worked lower through the week, while blocks inched higher. Sales activity was heavy, with blocks trading at their highest volume of the year. Barrels closed the week lower from last Friday at $1.4350, while blocks were higher for the week at $1.5350. 

DRY PRODUCTS: Nonfat dry milk prices declined as the market tone moved weaker, undercut by strong production in all regions of the country. Domestic buying interest is light with spot transactions tied to price and near term need. Export interest is declining with new business slow to develop. Dry buttermilk prices are trending lower on a weak market. Dry buttermilk production is steady as churning activity is near capacity at many churns in order to clear heavy cream intakes. Buyers are purchasing dry buttermilk for immediate needs only, unwilling to expand inventories on a downward trending market. Dry whole milk prices moved marginally higher in a lightly tested market. Dry whey prices moved lower this week as inventories continue to build alongside active cheese production. The increased supplies of available whey are giving buyers a chance to shop around for the best price. Dry whey spot load availability increased both in quantity and number of sources as manufacturers work toward managing inventories. Whey protein concentrate 34% prices moved lower on a transitional market. Manufacturers are clearing spot loads by setting prices that compete with nonfat dry milk.  Lactose prices on the mostly series are unchanged and the market tone is steady.

April 16th - April 20th, 2012: Dairy Market News at a Glance

BUTTER HIGHLIGHTS: The CME Group cash butter price declined 1 1/4 cents this week and closed on Friday at $1.4125. Churning schedules have eased following the active churning prior to the recent holiday. Cream volumes remain plentiful to the churn and many churns are running at or very near capacity levels. Many butter producers are able to manage their output at this time and be selective with their additional cream purchases. Churning continues to generate print butter for current and near term needs, but much churning is being directed toward bulk volumes which are clearing to inventory. Butter demand has slowed considerably. In most instances, orders are being placed for near or short term needs as many buyers feel that further price weakness will develop as milk and cream volumes increase seasonally. Retail buyers are indicating that feature activity is limited, although advertised butter continues to be present in many grocery ads. Cooperatives Working Together (CWT) accepted export assistance requests last week totaling 1.1 million pounds (487 MT). 

CHEESE HIGHLIGHTS: Heavier than anticipated milk production across the country continues to find its way to cheese plants. Production levels are at or near capacity in many areas. In the Midwest, milk supplies are being offered to some cheese manufacturers at below class price enhancing production. Retail demand is lower than two weeks ago as cheese features are not as prevalent in store ads. In some cases, retail prices have increased while wholesale prices are somewhat steady. Export demand is good as U.S. prices are favorable compared to current prices in Oceania. Trading at the CME Group this week has been active for barrels with 31 loads trading this week. In spite of the active sales, barrel prices have remained steady, closing Friday at $1.4600. Block prices firmed at the exchange with daily unfilled bids raising the price with no sales reported. Blocks closed Friday up 4 cents for the week at $1.5275. 

DRY PRODUCTS: Many dry product markets continued lower this week. Active production is pressuring the supply side of nonfat dry milk throughout the country as farm milk production continues to exceed 2012 projections. Condensed skim loads are crossing regional boundaries to find processing room and hiking production in some butter/powder plants, as dryer schedules allow. Dry buttermilk markets in the West declined this week as a response to active production in that region, but Central prices held steady. The Central market is lightly tested as buyers and sellers are not inclined to move beyond contract agreements at this time. Whey protein concentrate 34% prices notched lower for the fifth consecutive week as market participants note ready availability of edible and off spec nonfat dry milk at lower prices than WPC 34%. The lactose market held steady on the mostly price series. The range widened as some lower priced spot sales to intermittent customers finalized while spots sales between approved suppliers and end users also finalized at higher prices due to strong demand.

April 9th - April 13th, 2012: Dairy Market News at a Glance

BUTTER HIGHLIGHTS: The CME Group cash butter price continued to ease during the week and closed the trading week at $1.4250. Churning schedules across the country were very active late last week, over the recent holiday weekend, and into this week, but now have slowed somewhat. Class II cream demand has declined considerably compared to weeks prior to the holiday. Most cream handlers were anticipating the decline, but were also hopeful that Class II ice cream needs might absorb a good portion of this cream volume. It appears that some ice cream output continues, but not at a pace that would readily absorb available cream volumes. Many ice cream producers are indicating that their production lines are often running heavier than is usually the case for this time of the season, but recent very favorable temperatures and weather patterns have encouraged ice cream and soft service consumption. Butter orders slowed this week as buyers assess their holiday carryover volumes before returning to the marketplace. For those that are re-ordering, often their orders are being placed for short term or immediate needs. Food service orders are also lighter this week as buyers assess their needs. Cooperatives Working Together (CWT) assisted butter exports last week totaling 3.7 million pounds (1,697 MT). 

CHEESE HIGHLIGHTS: Increased milk supplies across the country continue to push cheese production. Many plants are operating at or near capacity to handle the extra offered supplies.  Some milk is being offered to cheese plants at a discount to move the supply. Cheese inventories are building, although export sales have helped to move some excess product. February monthly average prices for barrels and blocks were around 29 cents lower than last year’s price. Cheese prices had traded in a narrow band for the previous two weeks. This week saw a 5 ¼ cent drop for barrels on Thursday at the CME Group. Friday’s closing trade for the week saw a quick return back up the 5 ¼ cents on five sales. Sales activity at the exchange saw 18 loads of barrels traded this week, while blocks reported no sales. The week’s close for barrels on Friday was $1.4600 and blocks closed at $1.4875. 

DRY PRODUCTS: Nonfat dry milk prices are lower on a weak market. Milk processors are operating at near capacity to handle the strong farm milk intakes. The market undertone remains weak. Dry buttermilk continues to trend lower in light to moderate trading. Dry buttermilk production is active as significant volumes of surplus cream are moving to Class IV plants. The market undertone is weak. Prices for dry whole milk are lower as price pressure builds on the nonfat and butterfat components of this product. Dry whey prices are unchanged to lower. The market is still exhibiting weakness due to larger inventories finding their way to the spot market. Heavier than usual milk supplies to cheese plants, have increased the whey stream supply. Demand from ice cream manufacturers is helping clear some supplies. Prices for whey protein concentrate 34% moved lower on the mostly price series. Despite the cooperation between manufacturers and brokers to clear WPC 34% according to contract terms, higher than anticipated milk intakes/cheese production/WPC 34% production at some locations prompted some manufacturers to enter the spot market during the last few weeks. Lactose prices moved higher. The market tone is somewhat mixed as lactose spot load availability from manufacturers and resellers is variable.