MD_DA950 Dairy Markets at a Glance Report 11 - Released on March 22, 2022 CME GROUP CASH MARKETS (3/18) BUTTER: Grade AA closed at $2.7250. The weekly average for Grade AA is $2.7260 (-0.0075). CHEESE: Barrels closed at $2.0300 and 40# blocks at $2.1300. The weekly average for barrels is $2.0090 (-0.0435) and blocks, $2.1135 (-0.0945). NONFAT DRY MILK: Grade A closed at $1.8600. The weekly average for Grade A is $1.8515 (+0.0035). DRY WHEY: Extra grade dry whey closed at $0.7600. The weekly average for dry whey is $0.7590 (+0.0015). CHEESE HIGHLIGHTS : Cheese markets are seeing good demand from domestic and international markets. Both retail and foodservice note improvements, as warmer conditions and loosened COVID restrictions impact consumer demand level. Pulls on milk supplies by cheesemakers are strong throughout the regions, leading to fairly active production schedules. Cheese markets continue to demonstrate strength. Cheddar block and barrel prices have been mixed on the CME this week, but prices for both are currently north of two dollars. Spot availability is steady. Export demand for cheese is strengthening, driven largely by lower prices offered for U.S. produced loads of cheese in comparison to other internationally produced loads. BUTTER HIGHLIGHTS: Cream is still available to butter makers for the time being. That availability, however, is starting to tighten as busy seasonal Class II and Class III cream- based production pulls hard at cream supplies. Butter output varies from plant to plant, but many manufacturers are keeping active schedules and ramping up production. Butter inventories are mixed, with reports generally ranging from tight to adequate. Unsalted butter remains trickier to source than salted, though. Food service sales are strengthening as warmer weather and relaxed COVID safety precautions beckon to more restaurant patrons. Retail orders are increasing ahead of spring holidays. Across the country this week, bulk butter overages range from 7 to 16 cents above market. FLUID MILK: Milk production is steady to higher across the country as the spring flush advances. Class I demand is mixed throughout each region. In some parts of the country, Class I demand has declined as educational institutions have spring break scheduled in the coming weeks. Demand for Class III milk is strong in the East and Central regions. Condensed skim contracts are steady in the West. In the Midwest condensed skim is available, though contacts report that finding transportation is a challenge. Ice cream producers are increasing their schedules across the country and pulling heavily on regional cream supplies. F.O.B. cream multiples for all classes are 1.30 -1.38 in the East, 1.20-1.33 in the Midwest, and 1.00-1.28 in the West. DRY PRODUCTS: Prices for low/medium heat nonfat dry milk (NDM) were mixed across the country this week. Western contacts attribute lower prices at the bottom of the range to excess loads being sold to Mexico at a discount. NDM producers are favoring the production of low/medium heat to that of high heat. Dry buttermilk powder prices are holding steady across all regions. Spot inventories are tight in the Central and West regions. Dry buttermilk powder production has declined in the Central region as cream inventories are being utilized by other non-butter manufacturers. Dry whole milk production schedules are varied and limited by contractual demand. Due to this, spot inventories are tight and prices are steady. Prices for dry whey were mixed across the country this week. Contacts in the West report that higher prices at the top of the range were tied to certain indexes as the mostly price series slid lower. Demand for dry whey is mixed in the Central region. Contacts in the Northeast and West say that higher domestic prices for dry whey are contributing to a decline in demand from export purchasers. Whey protein concentrate (WPC) 34% prices moved higher at the top of the range. Stakeholders say that demand is strong as WPC 34% is being seen as a value in comparison to other dairy proteins. Lactose prices held steady across the range, though the top of the mostly price series moved higher this week. Prices for acid and rennet casein were steady to higher. Contacts expect that tight casein inventories will continue to put positive pressure on prices. INTERNATIONAL DAIRY MARKET NEWS: WESTERN EUROPEAN OVERVIEW: In the primary Western European milk producing countries, Germany and France, sources say that milk production has recently stagnated. Recent week after week volumes are almost steady. Production remains below levels in 2021 at this time. Less ingredient feeding is attributed as a significant factor. Annual milk production typically peaks in mid-April, then declines into November. That means that as the year progresses with sluggish milk output, it becomes increasingly challenging to climb back up as far as annual production totals. EASTERN EUROPE OVERVIEW: Poland opened 2021 by channeling fluid milk into SMP as the only manufactured dairy product to increase YOY from 2021. January butter and cheese YOY production declined. There is some discussion about whether this will change in February as the need to help secure food for war refugees increases. OCEANIA DAIRY MARKET OVERVIEW: Many east coast dairy producers in Australia are once again struggling with stressful conditions. Over 100 farms have been impacted by flooding. Key immediate problems are feed shortages, stock losses, and disposal of dead cows - all while flood conditions persist. The Australian government has stepped in with aerial fodder drops to cows stranded by flooding. Recent forecasts for wetter and warmer than normal conditions in coming weeks are keeping many dairy producers on edge. Uncertainty as to the pace of relative normalcy returning is causing unease. With about 85 percent of New Zealand's seasonal milk already produced, making up some previous disappointing monthly production is increasingly challenging. This is compounded by current hot and dry conditions in Waikato, New Zealand's largest milk producing area. Unfortunately, these conditions are expanding further south. SOUTH AMERICA OVERVIEW: After strong milk production through 2021, hot and dry weather at the beginning of 2022 has some South American dairy market participants concerned that milk production may not meet expectations. While recent rains and more seasonable temperatures have improved soil moisture and cow comfort, the economic pressures created by reduced yields and rising costs are creating financial stress for farmers. Soybean crop estimates for Brazil have been revised lower. In Paraguay, drought conditions are prompting crop analysts to identify the country as a net importer, rather than an exporter, of soybeans. With lower crop yields, feed costs for dairy farmers are increasing. In addition, pasture conditions and growth are not at levels supportive of strong milk production across many parts of key South American dairy regions JANUARY 2022 MILK SALES (FMMO): 3.8 billion pounds of packaged fluid milk products were shipped by milk handlers in January 2022. This was 1.7 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 1.5 percent from January 2021 and estimated sales of total organic fluid milk products decreased 3.3 percent from a year earlier. FEBRUARY PRODUCER PRICE INDEX (BLS): In February 2022, the Producer Price Index (PPI) for the all food manufacturing is 238.2, up 14.2 percent from 2021. The PPI index for manufactured dairy products is 233.5, up 16.7 percent from a year ago. The following are the February 2021 to February 2022 changes for selected products: fresh whole milk is 17.7 percent; cheese, 8.7 percent; butter, 111.8 percent; and dry milk products and mixtures, up 21.0 percent. NATIONAL RETAIL REPORT (DMN): Total conventional ads increased by 8 percent, while total organic ads grew by 12 percent. Ice cream in 48- 64 ounce containers was the most advertised conventional dairy product this week, while half gallon milk was the most advertised organic dairy product. Flavored milk in the gallon packaging saw the largest increase in ad volume for conventional dairy commodities, while unflavored milk in gallon packages garnered the largest percent increase from the previous week's ad numbers in the organic sector. Information for the period March 14 - 18, 2022, issued weekly Published by: Dairy Market News - Madison, WI Jason Karwal, 515-505-4747 Email: Jason.Karwal@ams.usda.gov Additional Dairy Market News Information: Dairy Market News (DMN) by Phone: (608)422-8602 DMN Website: https://www.ams.usda.gov/market-news/dairy DMN MARS (My Market News): https://mymarketnews.ams.usda.gov