Below are excerpts from Dairy Market News for the week of May 23 to 27. Report the complete report here.
Memorial Day holiday weekend sparks retail promotions of cheese
CHEESE HIGHLIGHTS: Cheese vat are full as manufacturers across the nation run at or near full schedules. Sales are strong for many industry participants. However, a few Midwest suppliers experienced a slowdown in interest outside of contracts. The holiday weekend sparked additional retail promotions, aiding sales. Several Northeast and Midwest contacts report an increase in demand for processed cheese.
Nationwide, cheese inventories are long. Although sales are strong, active production is filling any empty stock shelves right back up. A few industry contacts in the West speculate there are large volumes of older blocks and barrels in inventory that are going to be increasingly difficult to move. The international market’s interest in U.S. cheese is growing. Overall, the U.S. cheese market undertone is mixed. In CME Group trading Friday, barrels closed at $1.4400, up $.0850 from last Friday and blocks closed at $1.3800, up $.0650.
Processors prepare for heavy surplus milk volumes as schools let out
FLUID MILK: Weather conditions and changing stages of the flush, across regions of the country, are prompting mixed levels of milk output. In the East, milk production is rising in some areas but declining in others. While at the peak of the flush, farm level milk is seeing strong output in the Central region. California and Arizona milk production is flat. Both New Mexico and the Pacific Northwest are hovering at the top of the peak. Utah and Idaho report steady supplies of milk for processing.
Meanwhile, the forthcoming Memorial Day holiday is slowing the demand for fluid milk, as countrywide school closings for summer break push bottled milk demand that much lower. Processors are preparing for heavy surplus milk volumes that will be re -routed to their balancing plants. Cream is plentiful through the regions. Volumes are expected to move more actively into ice cream production after the Memorial Day holiday period. Eastern cream multiples for all Classes range 1.02-1.22, Midwest multiples 1.02-1.12, and Western multiples range 1.02-1.24. The California Department of Food and Agriculture announced a permanent change to their dry whey scale of Class 4b pricing formula, effective June 1, 2016.
Bulk butter stocks are increasing along seasonal trends
BUTTER HIGHLIGHTS: Butter manufacturing is active across the country. Moderate to heavy cream volumes continue clearing into churns. Bulk butter stocks are increasing along seasonal trends. However, f.o.b. spot prices remain above $2.00. Sales to retailers and food service are steady to higher due to the upcoming holiday weekend. Nevertheless, some manufacturers are quite content holding/storing stocks, in lieu of selling. In the Central region, some processors are microfixing bulk butter to meet the upcoming needs for Q3 and Q4. This week, a cooperative export assistance program accepted requests for 771,618 pounds of butter. The NASS Cold Storage report noted U.S. butter stocks as of April 30, 2016, were 298.2 million pounds, up 23% from last month. The Grade AA butter price at the CME Group on Friday closed at $2.0650, down 0.5 cents from a week ago.