National Dairy Market at a Glance
MD_DA950

     Dairy Markets at a Glance

     Report 12 - Released on March 22, 2019

     CME GROUP CASH MARKETS (3/22)
     BUTTER: Grade AA closed at $2.2650. The weekly average for Grade AA is $2.2780 (-.0005).
     CHEESE: Barrels closed at $1.5650 and 40# blocks at $1.5700. The weekly average for barrels
     is $1.5355 (+.1005) and blocks, $1.5755 (+.0375).
     NONFAT DRY MILK: Grade A closed at $.9575. The weekly average for Grade A is $.9605
     (-.0060).
     DRY WHEY: Extra grade dry whey closed at $0.3300. The weekly average for dry whey is
     $0.3135 (-.0175).
          BUTTER HIGHLIGHTS: Salted and unsalted butter production is fairly active throughout
     the country, while inventories are stable to growing, as plant managers continue adding to
     their mid-year supplies. Bulk requests and retail print orders are both reported as strong
     this week. In general cream supplies are still manageable for churning. However, needs of
     cream from Class II are constantly increasing, therefore, several manufacturers of butter
     are doing what is necessary to ensure cream availability for near future use. Bulk butter
     pricing varies among the regions: East, 5.0 cents to 8.0 cents over the market; Central,
     5.0 cents to 7.0 cents above the market; West, 3.0 cents to 7.5 cents over the market, with
     various periods and averages used.
          CHEESE HIGHLIGHTS: Barrel markets are showing real promise of late, as they vie to
     close the long-running gap with the CME block price. Barrel and curd producers in the
     Midwest are reporting positive sales numbers and near-future demand growth, along with
     balanced inventories. Northeast and Western cheese demand reports point to a general
     stability. Milk remains available, as reported spot milk was $.50 under to $2 under Class.
     Cheese production is steady to increasing nationwide. Eastern contacts suggest their cheese
     stores are steady to growing, while Western cheesemakers say demand is stable enough to
     alleviate some of their concerns about long inventories. Cheesemakers are hopeful regarding
     spring. Holidays, basketball playoffs, more grilling and outdoor/community events are some
     of the demand-related benefits of the season.
          FLUID MILK: Across much of the nation milk production is inching up along seasonal
     trends. Contacts in parts of the Northeast and Central regions say production is down a
     little from last year. And in parts of the southern tier of states, milk output is beginning
     to plateau. Manufacturers report having plenty of milk for processing. In parts of the
     country, farmers and milk handlers were contending with weather related issues: flooding
     across the Central region and a strong winter storm in the mountain states. Condensed skim
     loads are available in the Northeast and West. Cream is generally available, but industry
     contacts say ice cream production is picking up and cream is tightening. Cream multiples for
     all Classes are 1.16 to 1.27 in the East, 1.16 to 1.25 in the Midwest, and 1.05 to 1.18 in
     the West.
          DRY PRODUCTS: Low and medium heat nonfat dry milk prices are steady to lower amid slow
     spot trading activity. High heat nonfat dry milk prices are mixed, being steady to lower in
     the Central/East region, but narrowing in the West. Dry buttermilk prices held steady in the
     Central/East and the western mostly price series, but moved lower on the western price
     range. The dry buttermilk market remains relatively stable. Dry whole milk prices are
     unchanged. Dry whey prices are lower across the nation, except for the bottom of the Central
     and Northeast price ranges, which are unchanged. African swine fever, tariff effects and
     increasing production capacity are each exerting downward pressure on whey prices. Whey
     protein concentrate prices are unchanged. Lactose prices held steady, except for the bottom
     of the range, which moved lower. While domestic demand is steady, international lactose
     demand is giving mixed signals. Rennet and acid casein prices are higher driven by tighter
     market supplies.
          ORGANIC DAIRY MARKET NEWS: During February 2019, organic whole milk utilization totaled
     12.6 million pounds, down from 14.5 million pounds one year earlier, (-13.0 percent). The
     February 2019 butterfat content was 3.28 percent, slightly lower from 3.29 percent in 2018.
     Organic reduced fat milk utilization for February this year, about 15.1 million pounds, was
     down from 18.2 million pounds one year earlier, (-16.7 percent). Meanwhile, butterfat
     content was 1.33 percent, down from 1.34 percent last year. In the first week of spring,
     organic retail promotions improved by 68 percent. For organic milk, half gallon packages
     published the biggest number of ads. Additionally, this week's organic half gallon pack milk
     prices rose by $0.26 compared to last period's prices. The up-to-date retail milk price

     spread between organic and conventional half gallon milk is an organic premium of $2.50.
     The price spread shifted up $0.70 compared to the previous retail survey.
          NATIONAL RETAIL REPORT: Spring has sprung, and conventional ice cream in 48-64 oz.
     containers is the most advertised product/category for the second week, even with a 16
     percent decrease in ad numbers week over week. Shredded cheese in one-pound bags and organic
     half gallon bottled milk ads held the biggest increases from last week. The national
     weighted average advertised price for conventional milk half gallons is $1.85, compared to
     $4.35 for organic milk half gallons, an organic price premium of $2.50.
          FEBRUARY MILK PRODUCTION (NASS): Milk production in the 23 major States during February
     totaled 16.0 billion pounds, up 0.6 percent from February 2018. January revised production,
     at 17.5 billion pounds, was up 1.3 percent from January 2018. The January revision
     represented a decrease of 7 million pounds or less than 0.1 percent from last month's
     preliminary production estimate. Production per cow in the 23 major States averaged 1,838
     pounds for February, 21 pounds above February 2018. This is the highest production per cow
     for the month of February since the 23 State series began in 2003. The number of milk cows
     on farms in the 23 major States was 8.72 million head, 47,000 head less than February 2018,
     but unchanged from January 2019.
          APRIL ADVANCED PRICES (FMMO): Under the Federal milk order pricing system, the base
     Class I price for April 2019 is $15.76 per cwt. This price is derived from the advanced
     Class IV skim milk pricing factor of $7.05 and the advanced butterfat pricing factor of
     $2.5599. The base Class I price decreased $0.22 per cwt when compared to the previous month
     of March 2019. A Class I differential for each order's principle pricing point (county) is
     added to the base price to determine the Class I Price. The advanced Class IV skim milk
     pricing factor is $7.05. Thus, the Class II skim milk price for April 2019 is $7.75 per
     cwt, and the Class II nonfat solids price is $0.8611. The two-week product price averages
     for April 2019 are: butter $2.2854, nonfat dry milk $0.9587, cheese $1.5430 and dry whey
     $0.4118.
          JANUARY MILK SALES (UPDATED) (USDA, FMMO, AND CDFA): In January 2019, 4.2 billion
     pounds of packaged fluid milk products were shipped by milk handlers. This was 0.6 percent
     lower than a year earlier. Estimated sales of total conventional fluid milk products
     decreased 0.5 percent from January 2018 and estimated sales of total organic fluid milk
     products decreased 1.3 percent from a year earlier.
          MARCH RETAIL PRICES FOR MILK (FMMO): U.S. simple average prices for March are: $3.28
     per gallon for conventional whole milk, $3.22 per gallon for conventional reduced fat 2%
     milk, $4.07 per half gallon organic whole milk, and, $4.07 per half gallon organic reduced
     fat 2% milk.


     NOTICE -USDA ANNOUNCES AMENDMENT TO CLASS I SKIM MILK PRICE FORMULA: The U.S. Department of
     Agriculture (USDA) announced March 8, 2019, an amendment to the Class I skim milk price
     formula under the Federal Milk Marketing Order (FMMO) program, in accordance with the
     Agriculture Improvement Act of 2018 (2018 Farm Bill). The change is effective May 1, 2019.
     Currently, the Class I skim milk price is calculated using the higher of the monthly
     advanced pricing factors for Class III or Class IV skim milk, which reflect dairy product
     survey prices for the two weeks prior to the price announcement, plus the applicable
     adjusted Class I differential. Because market prices for these surveyed products fluctuate,
     the �higher of� factor used to determine the Class I skim milk price can change, increasing
     risk and uncertainty associated with hedging. To address this issue, Congress determined
     that the formula for the FMMO Class I skim milk price should be the average of the monthly
     Class III and Class IV advanced pricing factors plus $0.74 per hundredweight plus the
     applicable adjusted Class I differential. In accordance with the 2018 Farm Bill, the
     amendment is effective indefinitely, until further modified, and may not be modified sooner
     than two years after the effective date of this rule. The Federal Register notice is
     available at https://www.federalregister.gov/documents/2019/03/11/2019-04347/federal-milk-
     marketing-orders-amending-the-class-i-skim-milk-price-formula

     Information for the period March 18 - 22, 2019, issued weekly

     Published by:
     Dairy Market News - Madison, WI
     MIKE BANDLI, (608)422-8592
     Email: mike.bandli@ams.usda.gov

     Additional Dairy Market News Information:
     Dairy Market News (DMN) by Phone: (608)422-8602
     DMN Website: https://www.ams.usda.gov/market-news/dairy
     DMN MARS (My Market News): https://mymarketnews.ams.usda.gov/