MD_DA440                                                         
DA                                                               
MD DA440 BUTTER - WEST 

MADISON, WI.  March 9, 2016 (REPORT 10)

Western butter makers say that aside from regular contracts, butter demand has eased 
somewhat. The spring holiday butter orders are getting filled and inventories are 
building. Production is generally steady and active, however a few processors are 
backing off butter production and shifting cream to other manufactured product lines, 
like cream cheese and ice cream. Most view this as normal seasonal tendencies. A few 
manufacturers say additional inquiries for butter are light and buyers are taking a 
wait and see attitude. End users seem to be holding off and working through their 
stocks while waiting for clearer market signals of whether butter prices will slip as 
spring flush begins, or if strong domestic consumer demand will continue into summer. 
An underlying question some processors are considering is whether supply and demand 
are in balance. A few other are wondering if the secondary markets have filled 
warehouses and gained coverage of late year butter needs. 
The DMN National Retail Report-Dairy for the week of March 4-10 found that the U.S. 
weighted average advertised price of 1 pound butter is $2.90, down $.06 from last 
week. The U.S. weighted average price was $3.02 one year ago. In the Northwest, the 
weighted average advertised price of 1 pound butter is $2.87. In the Southwest the 
weighted average advertised price of 1 pound butter is $1.99. This week, a 
cooperative export assistance program accepted requests for 2.315 million pounds 
(1,050 metric tons) of butter (82% milkfat). Dairy Products (NASS) reports U.S. 
butter production during January 2016, 175.7 million pounds, was 2.1% lower than 
January 2015, but 1.6% higher than December 2015. In the West, total January butter 
production was 86.5 million pounds, 3.0% higher than last year. California December 
production was 52.8 million pounds, 8.1% lower than last year. Bulk butter pricing in 
the West this week is 5 cents under market to 2 cents above, based on the CME Group 
with various time frames and averages used. The CME Group February 2016 monthly 
average price for AA butter, $2.0840, is down from the January monthly average of 
$2.1214, but up from the February 2015 monthly average of $1.7293. The Grade AA 
butter price at the CME Group on Wednesday closed at $1.9600, down $.0200 from a week 
ago.

2016 U.S. Butter and Milkfat Exports (USDA-FAS)

                 2016 Exports      % Change From 
                 (Million Lb.)       1 Year Ago

January Total         5.7              N.C.

TOTAL, JAN            5.7              N.C.
 1 Mexico             4.4             + 85
 2 Canada             0.5             +  4
 3 Saudi Arabia       0.2             - 57
 4 South Korea        0.1             - 65
 5 UAE                0.1             +206

15300CT Mike.Bandli@ams.usda.gov 608.557.7010
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