Editor’s note: The following are available market reports and futures data as of March 7, 2008.

Butter
The butter market is firm. At the CME, the butter price increased for nine straight sessions, increasing 14.25 cents over the two-week span, before closing unchanged at $1.3225 on March 7. The firmness is attributed to increased demand for upcoming Easter/Passover holidays and tightness created by the new crop butter rule at the CME.

Butter movement is good for prints moving into the marketing channels ahead of the spring holidays. Retail features are being set and expected to move additional product. Bulk sales are fair to domestic accounts and mainly on program schedules. Export demand is still fair to good and helping to clear excess butter products.

The weak U.S. dollar and current pricing levels make the U.S. a good source for world needs. Current butter production remains strong to process the heavy cream supplies.

Cream is moving long distances to find processing homes. There are increased cream needs from higher class, cream-based product manufacturers who are preparing for upcoming holiday orders.

January butter production in the U.S. totaled 170.2 million pounds, 12.7 percent higher than a year earlier. This is the highest January total on record and the highest monthly total since 1945.

Cheese
The cheese market is weak with prices on the Chicago Mercantile Exchange falling into the $1.80s. Orders have slowed, as buyers watch the widening spread between the previous week’s higher prices and current prices.

Exports continue to remove cheese volumes, aided by the weak U.S. dollar against most other currencies. Current cheese prices, including premiums, continue to limit demand for cheese to be placed into aging programs. Some plants are again using NDM or condensed skim to boost yields. Cheese production remains seasonally active, though most manufacturers continue to avoid making uncommitted loads.

The Kansas City Commodity Office announced the purchase of between 5.4 and 22.1 million pounds of unfrozen LMPS mozzarella for July 1 – December 31, 2008 delivery under MCD6-061. This purchase supplements the mozzarella purchase made back in November 2007.

Fluid milk
Milk production continues to follow most seasonal patterns. Milk receipts in Arizona are thought to be near, if not at, the annual peak. Florida is perhaps a few weeks away from the peak. In California, milk volumes remain well above year-ago levels and manufacturing plants continue to struggle to handle milk receipts.

Exports of milk and components to other states continue. Cattle are getting an early start to the grazing season on the west side of the Pacific Northwest due to expensive and limited hay supplies. Fresh grass tends to lead to increased milk volumes, though often accompanied with lower solids.

Class I interest is occasionally stimulated by retail features in March, taking advantage of the sharp price decline in Class I prices from February.

Dry products
The whey markets are starting to show signs of bottoming as demand improves. Customers are starting to try to make deals. Prices are both higher and lower. Inventory for some producers is in better balance, allowing them to increase asking prices while others’ supplies remain long.

The lactose market is seeing some improvement in interest though not all producers have been able to clear the inventory backlog. Some producers are working on second quarter contracts. The whey protein concentrate (WPC) market is unsettled to weak.

Lower prices for competitive dairy proteins are impacting demand. High grain prices and increased use of whole liquid milk on the West Coast are impacting animal use.

The nonfat dry milk (NDM) and buttermilk markets remain weak as production remains heavy and many producers still have more inventory than desired. Drying remains active though buttermilk producers are still trying to clear most as condensed rather than dry. Buttermilk drying time continues to be impacted by the time needed to dry skim.

February agricultural prices highlights (NASS)
The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in February 2008 advanced 2 points to 172. Compared with February 2007, the index was up 16 points (10.3 percent). The index of prices received by farmers for dairy products declined 9 points during the month of February 2008 to 148. Compared with February 2007, the index was up 34 points (29.8 percent).

Prices received by farmers in February with changes from January were: for All Milk, $19.30, down $1.20; Fluid Grade Milk, $19.30, down $1.20; and for Manufacturing Grade Milk, $18.70, down $.90.

January 2008 dairy product highlights (NASS)
Butter production was 170.2 million pounds in January, 12.7 percent above January 2007 and 20.9 percent above December 2007. American type cheese production totaled 333.7 million pounds, 2.7 percent below January 2007 and 0.2 percent below December. Total cheese output (excluding cottage cheese) was 810.0 million pounds, 1.9 percent below January 2007 and 4.0 percent below last month.

Nonfat dry milk production, for human food, totaled 119.4 million pounds, 9.7 percent above January 2007 and 11.3 percent above December 2007. Dry whey production, for human food, was 85.3 million pounds, 7.8 percent below January 2007 and 7.9 percent below December.

December mailbox milk prices (AMS & CDFA)
In December 2007, mailbox milk prices for selected reporting areas in Federal milk orders averaged $21.04, down $.77 from the previous month. The component tests of producer milk in December 2007 were: butterfat, 3.82 percent; protein, 3.15 percent; and other solids, 5.71 percent. On an individual reporting area basis, mailbox prices decreased in all federal milk order reporting areas except in Wisconsin, Minnesota and Illinois, and ranged from $23.96 in Florida to $19.88 in New Mexico. In December 2006, the Federal milk order all-area average mailbox price was $14.20, $6.84 lower.

January fluid milk sales (AMS & CDFA)
During January, about 4.8 billion pounds of packaged fluid milk products is estimated to have been sold in the U.S. This was 1.7 percent lower than January 2007. After adjusting for calendar composition, sales in January 2008 were 1.0 percent lower than January 2007.

On an individual product basis, after adjusting for calendar composition, sales of organic whole milk, reduced fat milk (2 percent), low fat milk (1 percent), organic fat-reduced milk, and buttermilk increased from January 2007, while sales of whole milk, flavored whole milk, fat-free (skim) milk, and flavored fat-reduced milk decreased from a year earlier.  PD