MD_DA950 DY, DAIRY MD DA950 NATIONAL DAIRY MARKET AT A GLANCE October 6, 2017 MADISON, WI (REPORT 40) CME GROUP CASH MARKETS (10/6) BUTTER: Grade AA closed at $2.3400. The weekly average for Grade AA is $2.3390 (-.0530). CHEESE: Barrels closed at $1.7450 and 40# blocks at $1.7600. The weekly average for barrels is $1.7190 (+.0180) and blocks, $1.7430 (+.0295). NONFAT DRY MILK: Grade A closed at $0.8250. The weekly average for Grade A is $0.8270 (-.0050). BUTTER HIGHLIGHTS: Cream availability in the United States is steady to relativity tight. Butter production is fairly active in many balancing operations. Supplies are comfortable to long. Industry contacts suggest a few manufacturers looked to liquidate excess inventory before the fall baking season. The demand in the domestic market is moderate to strong. Overall, many market participants are willing to watch where the prices go. International interest is steady as domestic prices are competitive in the global market. Spot trading activity is steady as manufacturers are offering butter, but traders and brokers are counteroffering lower prices. Bulk butter prices range from flat market to 8 cents over the CME average. The market undertone is steady with signs of uncertainty as prices have slipped, but there are expectations of butter prices to increase in the near future. Friday's CME Group cash trading saw Grade AA butter close at $2.3400, up $0.0250 from last Friday. CHEESE HIGHLIGHTS: Pizza style cheese, cheese curds, and Swiss cheese are currently moving well for cheese producers throughout the country. Export demand for Western cheesemakers has also increased. Milk supplies vary from region to region. As Midwestern cheese producers are receiving fewer spot milk offers, milk in the Northeast is still fairly accessible for cheese production. Spot milk prices were reported from flat market to $2 over Class. Cheese production is generally steady across the nation. Cheese inventories are sufficient to long in many cases. The market tone has improved, along with increasing CME cheese prices and a decreasing block to barrel CME price gap. Long inventories continue to upset the overall market temperament, but the current tone is generally positive. CME Group trading Friday, barrels closed at $1.7450, up $0.0525 from last Friday. Blocks closed at $1.7600, up $0.0250 from last Friday. FLUID MILK: Milk availability is generally in good balance across the nation. Milk production in California and Arizona is trending higher as cooler weather builds into the states. In the Pacific Northwest, milk intakes are seasonally in balance, while strong milk output continues in the mountain states of Idaho, Utah and Colorado. A few surplus loads of milk from Idaho are finding their way into neighboring states for processing. Central region milk yields are slightly lower and surplus milk is becoming harder to find in the region. Available milk from the Central region and New Mexico continue to backfill processing needs within Southern milk sheds, refilling pipelines in the aftermath of the storms last month. Florida milk shipments are returning to normal, but milk production has not fully rebounded. Industry contacts expect imported milk shipments will decline as Florida milk production increases amid more favorable weather. Milk volumes are flat in the Northeast and slightly lower in the Mid-Atlantic and Southeast regions. Cream multiples for various uses are steady in the East, 1.25 to 1.34, steady in the Midwest, 1.23 to 1.30, and slightly higher in the West, 1.06 to 1.28. DRY PRODUCTS: Low/medium nonfat dry milk prices are mostly lower in the Central and East, but mixed in the West. Inventories are long and the market tone is bearish. High heat nonfat dry milk prices are steady to lower nationwide. Inventories are building somewhat ahead of the fall baking push. Prices for dry buttermilk are unchanged in the Central and East, but steady to lower in the West. Inventories are more available and are sufficient to cover most contractual and spot needs. Whole milk powder prices are mixed. A few spot sales of specific brands pulled the top of the price range higher. Prices for dry whey range from steady to lower across the nation. Supplies are long and the market tone remains weak and unsettled. Lactose prices are steady to lower. Industry contacts report low prices and intense competition from European lactose manufacturers. Prices for whey protein concentrate 34% are flat. Rennet casein prices are weaker for near term deliveries while acid casein prices are unchanged. ORGANIC DAIRY MARKET NEWS (DMN): Results of the 2016 NASS Certified Organic Survey were recently released. For the 2016 data, in absolute terms, New York has the largest number of organic dairy farms, 471. Wisconsin had led the survey in farm numbers in 2008 and 2014. California has the highest organic milk sales (volumes and dollars) of any state. Texas has the highest average organic milk sales in dollars per farm, $27,415,333. In New England, Federal Milk Market Order 1 reports that during August, 2017, organic whole milk utilization totaled 15.1 million pounds, up from 14.3 million pounds one year earlier. Organic reduced fat milk utilization for August this year, 20.0 million pounds, was up from 19.2 million pounds one year earlier. This week, organic milk registers 55 percent of total organic dairy retail ad numbers by commodity. Organic yogurt and organic cottage cheese trail at 19 percent and 12 percent, respectively, of overall organic dairy advertisements for this survey period. Overall, organic retail ads rose 34 percent above a week ago. While organic cheese ads declined 78 percent, organic milk ads grew 21 percent and organic yogurt ads rose 47 percent. Meanwhile, the price for organic one gallon milk is $5.94, resulting in an organic price premium of $2.97 over conventional milk. Retail survey indicators point to organic Greek yogurt, 32 ounce, as having the largest price adjustment of all organic commodities. Retail ad prices ranged as high as $5.99. Regionally, retail outlets in the Southeast, Northeast, South Central, Southwest, and Northwest were active when considering retail ad volume. Organic cottage cheese, 16 ounce, posted the largest percentage change in ad volume, up 567 percent compared to the previous retail survey period. NATIONAL RETAIL REPORT-DAIRY (DMN): This week, total conventional dairy ads increased 8 percent, and organic dairy ads increased 34 percent. As fall has begun, compared to last week, conventional 1 pound butter ads have increased a hearty 120 percent, while organic butter ads increased 51 percent. The U.S. weighted average advertised price for conventional butter in 1 pound packages is $3.46, down 32 cents from the last week. The U.S. weighted average advertised price for organic butter in 1 pound packages is $4.78, down 40 cents from the last week, with an organic premium of $1.32. The U.S. advertised price for 8 ounce conventional cheese blocks averaged $2.52, compared to $3.50 for 8 ounce organic cheese blocks, an organic premium of $0.98. The U.S. advertised price for 8 ounce conventional cheese shreds averaged $2.47, compared to $3.49 for 8 ounce organic cheese shreds, an organic premium of $1.02. Total conventional cheese ads increased by 26 percent from last week, while total organic cheese ads decreased by 78 percent. Conventional 4-6 ounce Greek yogurt has an average sale price of $0.94, down 6 cents from last week. The average price for 4-6 ounce conventional yogurt is $0.50, up 1 cent from last week. The average price for 4-6 ounce organic Greek yogurt was $1.23. There were no reported ads for 4-6 ounce organic yogurt. Total conventional yogurt ads are unchanged from last week, while total organic yogurt ads increased 47 percent. The weighted average price for conventional one gallon milk is $2.97. The weighted average price for organic one gallon milk is $5.94, resulting in an organic price premium of $2.97. While conventional milk ad numbers decreased by 2 percent from last week, ads for organic milk increased 21 percent. AUGUST DAIRY PRODUCTS HIGHLIGHTS (NASS): Butter production was 131 million pounds, 6.2 percent above August 2016, but 3.4 percent below July 2017. American type cheese production totaled 399 million pounds, 1.5 percent above August 2016, but 0.5 percent below July 2017. Total cheese output (excluding cottage cheese) was 1.03 billion pounds, 2.3 percent above August 2016, but 0.7 percent below July 2017. Nonfat dry milk production, for human food, totaled 136 million pounds, 15.9 percent above August 2016, but 7.9 percent below July 2017. Dry whey production, for human food, was 94.7 million pounds, 27.0 percent above August 2016, but 4.1 percent below July 2017. Ice cream, regular hard production totaled 74.1 million gallons, 1.5 percent above August 2016, and 4.9 percent above July 2017. SEPTEMBER FEDERAL MILK ORDER CLASS AND COMPONENT PRICES (FMMO): Class Prices: The following are the September 2017 class prices under the Federal milk order pricing system and changes from the previous month: Class II: $16.80 (-$0.76), Class III: $16.36 (-$0.21), and Class IV: $15.86 (-$0.75). Component Price Information: Under the Federal milk order pricing system, the butterfat price for September 2017 is $2.8559 per pound. Thus, the Class II butterfat price is $2.8629 per pound. The protein and other solids prices for September 2017 are $1.6988 and $0.2241 per pound, respectively. These component prices set the Class III skim milk price at $6.59 per cwt. The September 2017 Class IV skim milk price is $6.08, which is derived from the nonfat solids price of $0.6753 per pound. Product Price Averages: The product price averages for September 2017 are: butter: $2.5298, nonfat dry milk: $0.8499, cheese: $1.6608, and dry whey: $0.4167. 1300CT 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