The following excerpts are from the U.S. Department of Agriculture’s Dairy Market News for the week ending Jan. 13. Read the full report here.
Many butter plants are running at full capacity
BUTTER HIGHLIGHTS: Nationwide, many butter plants are running at full capacity clearing most of the large cream volumes currently available in the market. Overall, butter supply is above demand as stocks continue building into cold storage for future needs later in the year. Although butter churners are focusing on bulk processing, print production is also active in some plants ahead of the upcoming Super Bowl and spring holidays retail needs. Spot sales activity for bulk is light. This week bulk butter pricing throughout the nation is 2 cents below to 8 cents above, based on the CME Group with various periods and averages used.
The NASS Dairy Products report noted total U.S. butter production during November 2016 was 143.7 million pounds, 5.7 percent lower than last year. During January–November 2016, U.S. butter production totaled 1.725 billion pounds, 3.0 percent more than the same period in 2015. The Foreign Agricultural Service (FAS) reports November 2016 U.S. exports of butter and milkfat totaled 5.8 million pounds, up 107% from a year ago. Friday at the CME Group, Grade AA butter closed at $2.2250, up $.0050 from last Friday.
NFL football games create demand for pizza cheese
CHEESE HIGHLIGHTS: Cheese production is active throughout the country this week, although winter storms have caused some delays in Northeastern production schedules. Plentiful milk is reported in the Midwest and West, as more educational institutions return after the holiday break. Midwestern contacts expect readily available milk into next week. Food service orders in the Northeast are steady, but a bit slower in the Midwest. Retail demand is fair to strong again this week. Mozzarella demand in the West is beginning to build for prime pizza cheese season: football playoffs and the Super Bowl.
Stocks of fresh blocks are a little harder to find, whereas aged blocks and barrels remain available. The Foreign Agricultural Service (FAS) reports that November 2016 U.S. cheese and curd exports totaled 55.0 million pounds, a 9.0% increase from November 2015. Dairy Products (NASS) reports November 2016 total U.S. cheese production, 1.011 billion pounds, was 2.6% below October 2016. In CME Group trading Friday, barrels closed at $1.6400, up $.0650 from last Friday. Blocks closed at $1.7250, up $.0550 from last Friday.
Winter storms, school demand affect milk production
FLUID MILK: Across the nation, various weather patterns are influencing milk production and the return of students to classrooms is influencing fluid milk demand. As schools restart after winter breaks, demand for single serve containers has increased. Bottling demand in the Northeast, Mid-Atlantic and Southeast has been strong as wintery conditions prompt an upsurge in fluid milk demand ahead of the storms, and retailers restock shelves following the storms. Milk production in the Northeast and Mid-Atlantic states is mostly steady, while production is building in Florida. Colder weather in the South Central area has suppressed milk output slightly. However, milk handlers in the North Central region report on-farm milk pickups are steady to higher.
Cheese plants seek milk
Demand for spot loads of milk from cheese plant operators is building. Current prices on loads range from $2.00 under to $1.50 over Class depending on the type of cheese made. Heavy rains in areas of California have swamped some dairy zones, pushing quality and volumes down a bit. Milk yields in Arizona and New Mexico are rising due to comfortable daytime temperatures in the region. Milk production in the Pacific Northwest is following typical seasonal patterns, returning to normal levels as temperatures moderate.
Last week’s winter storm in the mountain states suppressed milk production, but industry contacts expect milk volumes to return. Manufacturers are seeing plenty of milk available for processing. Demand for condensed skim is increasing and NDM/ SMP manufacturers are pulling heavy volumes.
Cream is in good supply
Cream is generally in good supply. The Eastern cream market is weak, but some spot loads are finding homes in the Central region. Ice cream manufacturers are starting to ramp up production schedules. With the Super Bowl approaching, some cream cheese and sour cream producers are pulling more cream. Cream multiples range from 1.00- 1.20 in the East, 1.08-1.21 in the Central, and 1.00-1.20 in the West.