Milk heads toward the 'doldrums' as cheese production slows, says USDA

Farm milk production is stepping down gradually in most areas of the country, reports Dairy Market News for the week of June 11 to 15. The publication from the USDA says that "most areas also report bottled milk demand is heading toward the summer doldrums."

USDA also notes that production schedules at cheese plants are slowing as milk supplies appear to have passed the peak Spring flush.
The milk production forecast for 2012 is raised as cow numbers are expected to decline more slowly. The production forecast for 2013 is unchanged. Export forecasts are raised for both 2012 and 2013 on expected strength in cheese and nonfat dry milk (NDM) sales.

The all milk price forecast for 2012 is lowered to $16.85 to $17.25. The all milk price for 2013 remains unchanged from last month at $17.25 to $18.25

Here's a summary of the most recent report. Read the entire Dairy Market News analysis here.

FLUID MILK. Cream supplies are contracting as less standardized milk is generated for current fluid milk demand. Contract and spot cream sales into ice cream/frozen dairy dessert production increased. Some national and regional dairy dessert brands note better than expected consumer adoption of single serve ice cream-based products, which is increasing cream needs to keep pace with consumer sales. Cream multiples are increasing, with sufficient market tightness to move spot sale prices over contract prices in most regions. Crop progress is reported to be at or ahead of expected development to date. North Central region farmers’ activities center around second cuttings on alfalfa, while cool weather and intermittent rain has Utah and Idaho alfalfa harvesting temporarily on hold. Corn in Texas improved with recent precipitation.

BUTTER HIGHLIGHTS.The CME cash AA butter price remains firm and is the highest cash price since late January. Churning schedules across the country are active, basically absorbing cream volumes from regular and ongoing suppliers. Surplus cream volumes of earlier this spring are gone and churning activity is often keeping pace with demand, thus inventory clearances are lighter. Class II cream demand is seasonally strong as ice cream and ice cream mix needs increase.

CHEESE HIGHLIGHTS. Production schedules at cheese plants are slowing as milk supplies appear to have passed the peak Spring flush. Plant managers are keeping an eye on inventories and have reduced production in some cases. Mozzarella producers are especially conscious of reduced orders. Export demand has been helpful in moving cheese out of the country. FAS reported April exports up 31% from last year and up 12% for the year. Cooperatives Working Together (CWT) continues to assist with export sales this week with 3.3 million pounds accepted. The strong U.S. dollar is hindering some sales.

Read the complete report, which includes Organic Dairy Market News, online.