Dairy Foods
USDA's Dairy Market News

Milk demand is strong, cheese prices are 'topsyturvey,' reports the USDA

A look at milk, cheese, butter and powder supply and demand.

November 17, 2012

The following summary is from the United States Department of Agriculture's Dairy Market News for the week of Nov. 12 to 16. Download the complete 27-page report here.

MilkFLUID MILK: Class I demand continues to be very strong in the Northeast and Mid-Atlantic regions, limiting manufacturing milk supplies. Milk production in Florida continues to increase, but some contacts feel the flush this year will fall short of last year’s levels.

Milk production in the Southeast continues to increase along the seasonal trend. Milk production in the Central region is uneven. Marketers report that intakes are at expected levels with some reports of the beginning of increased volumes. Milk component levels are somewhat lower, but still better than anticipated. 

California milk output trends continue to indicate steady to slightly higher gains. Processing plants are running at manageable levels and no issues are expected over the Thanksgiving holiday period. Conditions have been ideal for milk production across Arizona and total output is increasing on a weekly basis. 
Milk production levels in the Pacific Northwest are near or at seasonal lows. Cooler temperatures along the coast are bringing rains and snow to the mountains of Oregon and Washington. Utah and Idaho milk supplies are along expected lines.

Cheese

CHEESE HIGHLIGHTS: Cheese prices have been on a topsyturvey run for the last few weeks. After topping out in late October at $2.0800 for barrels and $2.1200 for blocks at the CME Group in Chicago, the market has moved lower to end the week at $1.7225 for barrels and $1.8250 for blocks. Including last Friday’s close, sales at the exchange have been active. Fifteen loads of barrels and twenty nine loads of blocks have been sold as the market moved up and down. Demand for cheese is good as buyers are looking to build on sales at the lower prices. The lower price has also increased interest into the export market. Along with assistance from the CWT program, the exports of cheese and curd from January-September have totaled 444.3 million pounds, a 21% increase from the same period a year ago. Recent ad featuring for retail sales has increased as the holidays approach.

BUTTER HIGHLIGHTS: The CME cash butter price held steady for much of the week but trended lower by week's end to close at $1.7950, the lowest cash price since August 20. Butter production across the country remains seasonally active, although many butter producers are closely monitoring fresh production. Yearend butter orders have been very good for upcoming Thanksgiving needs with post-Thanksgiving orders also positive. Many producers and handlers have a pretty good picture of butter needs for the balance of the holiday season, thus they are balancing fresh production with inventoried stocks. In many instances, butter producers are churning with regular sourced cream volumes and are not aggressively seeking additional cream volumes.

ORGANIC DAIRY MARKET NEWS (DMN): AMS reports Total Organic Milk Products sales for September 2012, 174 million pounds, were down 4.5% from September last year, but up 2.4% for January through September this year compared with the same period last year. Organic Whole Milk sales for September 2012, 44 million pounds, were up 7.6% compared with September 2011 and up 9.5% January through September this year compared with last year. Organic Fat- Reduced Milk sales for September 2012, 129 million pounds, were down 8.0% compared with September 2011 but up 0.3% January through September this year compared with last year. For Organic milk, the national weighted average advertised price for half gallons is $3.86, up 38 cents from last period which was down 12 cents from the prior period. This results in an organic-conventional half-gallon milk advertised price spread of $1.16, compared to $1.27 two weeks ago and $2.07 four weeks ago. The average price spread for 2012 is $1.32.