MD_DA440                                                         
DA                                                               
MD DA440 BUTTER - WEST 

MADISON, WI.  July 6, 2016 (REPORT 27)

WEST BUTTER

Western butter contacts say cream is tightening, especially in the Southwest. As ice 
cream production continues to increase and milk components decrease, fewer spot loads of 
cream are finding their way into butter churns. Butter manufacturers seem content to use 
the cream available to them rather than compete for additional loads. Production is still 
active and full in many cases. Some butter manufacturers are beginning to transition from 
bulk butter to print butter in advance of increased domestic demand later in the year. 
Butter inventories are at seasonal highs and above those of previous years. In addition, 
some industry contacts say a lot of the butter stocks are not fully committed to specific 
customers. But most butter makers are not concerned about inventory levels because they 
believe strong domestic late-year demand will consume much of the stockpiles. The DMN 
National Retail Report-Dairy for the week of July 1-7 found that the U.S. weighted 
average advertised price of 1 pound butter is $3.38, up $.36 from last week. The U.S. 
weighted average price was $3.04 one year ago. In the Southwest, the weighted average 
advertised price of 1 pound butter is $3.57, with a range of $2.49-3.99. In the 
Northwest, the weighted average advertised price of 1 pound butter is $3.62, with a range 
of $2.99-3.99. This week, a cooperative export assistance program accepted two requests 
for export assistance for 352,740 pounds of butter (82% milkfat). So far this year, the 
program has assisted member cooperatives who have contracts to sell 5.351 million pounds 
of butter (82% milkfat) in export markets. According to the NASS Dairy Products report, 
U.S. butter production during May 2016, 169.9 million pounds, was 0.3% higher than May 
2015, but 3.7% lower than April 2016. U.S. cumulative 2016 butter production through May 
is 878.5 million pounds, 5.6% higher than the same period last year. In the West, total 
May butter production was 81.4 million pounds, 8.3% lower than last year. California May 
production was 49.5 million pounds, 9.3% lower than last year. Bulk butter pricing in the 
West this week is 1 cent under market to 3 cents above, based on the CME Group with 
various time frames and averages used. The CME Group June 2016 monthly average price for 
AA butter, $2.2640, is up from the May monthly average of $2.0554 and up from the June 
2015 monthly average of $1.9065. The Grade AA butter price at the CME Group on Wednesday 
closed at $2.2825, down $.0475 from a week ago.

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

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

May Total             1.5             - 57

TOTAL, JAN - MAY     26.7             +  3
 1 Mexico            17.3             +167
 2 Canada             3.5             + 72
 3 Saudi Arabia       2.2             - 76
 4 South Korea        0.6             - 68
 5 Taiwan             0.4             +  7


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