MD_DA770                                                                        
DA                                                                              
MD DA770 Lactose - Central and West                                             

MADISON, WI.  August 10, 2017 (REPORT 32)                                       

LACTOSE - CENTRAL AND WEST                                                      

Prices for lactose are unchanged on the mostly price series, but slid lower at both ends 
of the price range. A few manufacturers that make lactose of qualified and preferred 
brands have been like islands of stability within a sea of uncertainty. These processors 
report solid demand, relatively comfortable to tight inventories, and firm prices. 
However, much of the lactose market has an uncertain tone. Contracting for Q3 has been 
slow to develop and covers only a portion of what usually is secured. A few industry 
contacts report receiving lower priced offers from manufacturers for 200 mesh lactose, 
suggesting a wider availability of all mesh sizes. Manufacturers also say international 
demand has been slow. Buyers seem to be taking a wait and see approach. Some lactose 
sales are under pressure from whey permeate and other carbohydrate sources that are 
offered below published lactose prices. And U.S. contacts report increased competition 
from European lactose manufacturers. A few market observers note the shift of EU milk 
supplies from butter and powder to cheese has increased lactose production, while 
lowering the use of lactose for standardization. The result is more lactose available on 
the world market. The July 2017 Dairy Market News average of the mostly price series for 
Central and West lactose was $0.3745, compared to $0.3998 one month ago and $0.2769 one 
year ago. NASS's Dairy Products report shows U.S. lactose production during June 2017 
totaled 96.7 million pounds, a 3.2 percent increase from one year ago, and 1.9 percent 
more than last month. Year to date lactose production through June is 562.3 million 
pounds, 3.4 percent more than a year ago. Month ending stocks, at 136.1 million pounds, 
are 8.8 percent higher than one year ago, and 3.7 percent more than May 2017. According 
to Eucolait, total annual lactose imports, January through June, into China are up 3.2 
percent from the same period in 2016. Imports from the U.S. comprise 74.0 percent of 
those imports. January through June imports of lactose into Japan are up 11.6 percent 
from 2016. Imports from the United States make up 58.1 percent of lactose imports into 
Japan.

Including spot sales and up to 3 month contracts.                               
F.O.B. EDIBLE, NON PHARMACEUTICAL   .2400 - .4700    MOSTLY:   .3100 - .4000    


U.S. Lactose Exports, H.S. Code 1702110000(FAS)
                 2017 Exports      % Change From
                 (Million Lb.)       1 Year Ago

June Total               52.3           + 1

TOTAL, JAN - JUNE       286.8           + 3
 1 China                 46.2           - 9
 2 Mexico                43.6           + 22
 3 New Zealand           38.2           - 23
 4 Japan                 22.8           - 1
 5 Indonesia             19.4           - 14


1100CT Mike.bandli@ams.usda.gov 608.422.8592
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: http://www.ams.usda.gov/market-news/dairy
Dairy Market News database portal: http://www.marketnews.usda.gov/mnp/da-home