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The Milk House

PD MARKET REPORTS: Organic market needs more consumers PDF Print E-mail
Archives - Past Articles
Tuesday, 19 January 2010 17:00

Editor’s note: The following are available market reports and futures data as of January 1, 2010. Butter
The CME cash butter price held steady at $1.3275. Churning schedules across the country have been active as cream supplies are readily available to butter operations. Cream prices have ranged from below the CME butter market to flat market delivered to multiples above various pricing bases. In many instances, cream buyers stated what they were willing to pay and stuck to their plan.

Much of the butter generated at this time is clearing to inventory for future domestic and international sales. Some butter producers are generating 82 percent butter for export in 2010. Butter demand slowed greatly as most buyers were absent from the market. Buying interest was projected to resume once buyers have had a chance to review holiday clearance.

Cheese
CME Group cash block cheese prices continued to decline with the barrel/block spread down to 2 cents on December 31. The CME Group block price was $1.4500 per pound compared to $1.1325 on December 31, 2008. Barrels ended 2009 at $1.4300 compared to $1.1300 in 2008.

Current interest is light as buyers wait for prices to settle and reorder after reviewing year-end movement. Inventory is accumulating at the plant level. Production remains seasonally active as surplus holiday milk volumes clear to cheese plants.

On December 29, the Kansas City Commodity office announced solicitation DPD-AGAP1-001 seeking 31.2 million pounds of cheddar and mozzarella cheese for March through December 2010 delivery. The purchase is funded by the $60 million included in the 2009 Agriculture Appropriations Bill.

Fluid milk
Milk supplies are beginning to increase along seasonal norms across the country. Steady to increased supplies along with lower Class I demand have allowed milk to move to manufacturing channels. The increased availability allowed dryers and churns to operate at near capacity.

Cream supplies are described as heavy and are being acquired at reduced multiples in many areas. Class I demand should begin to increase soon in the East to resupply bottling needs. Dry product manufacturers are using the extra supplies to build inventories. Year-end sales of product have been slow with buyers waiting to see what the new year will offer for prices.

Dry products
Non-fat dry milk production has increased with additional manufacturing milk supplies. Prices remain near steady. Increased production has led to some high heat production for next year’s sales. Producers are building inventory with buyers and sellers waiting for the new year to determine price and supply strategies. There is some optimism concerning favorable export sales for 2010.

Buttermilk prices remain unchanged. Supplies are increased due to heavy churning activity, but most product is being dried to build inventory for future use.

Whey prices are steady with production levels stepped up. The increased production is being used to fill contracts, but mostly to build inventory. The whey protein concentrate market is steady to firm with good demand expressed for next year.

Lactose markets are steady and future contract needs are being negotiated. Casein prices are steady to firm and buyers are actively seeking supplies for 2010.

Organic dairy market overview (DMN)
The year-end review of 2009 surveys of national newspaper food store advertising conducted by Dairy Market News since beginning organic dairy reporting earlier this year, continues to show aggregate organic dairy ads to be a fraction of non-organic dairy ads. A manager commented that the organic dairy industry is still transitioning from a struggle to produce increasing volumes of milk to meet rapidly increasing demand, to a new phase where “during 2010 we have to motivate more consumer demand for organic dairy products as well as organic milk.”

Of 9,151 surveyed ads from throughout the U.S., 1,906 contained organic dairy content. Virtually all contained non-organic dairy content. Among ads with organic content, the Midwest dominated all regions. In the Midwest, organic dairy ads appeared in almost 44 percent of weekly newspaper supermarket ads, slightly over twice higher than any other region. While the Northeast traditionally has been close to the Midwest in percentage terms, a significant decline in Northeast organic ads this period moved the region to fourth place, with 16.9 percent of ads containing organic content.

December agricultural prices highlights (NASS)
The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in December 2009 was unchanged at 177. Compared with December 2008, the index was down 1 point (0.6 percent).

The index of prices received by farmers for dairy products advanced 8 points during the month of December 2009 to 125. Compared with December 2008, the index was up 6 points (5.0 percent). Prices received by farmers in December with changes from November were: for All Milk, $16.30, up $1; for Fluid Grade Milk, $16.30, up $1; and for Manufacturing Grade Milk, $16.10, up $1.10.

October over-order charges (dairy programs)
For October 2009, the all reporting areas’ combined average over-order charge on producer milk used in Class I was $2.23 per hundredweight, down $0.05 from the September 2009 average. Ninety-two percent of the producer milk used in Class I carried an over-order charge. On an individual order basis, Class I over-order charges ranged from $0.74 in the Pacific Northwest to $3.59 in Florida.

For producer milk used in Class II, the all reporting areas’ combined average over-order charge was $1.14 per hundredweight, down $0.04 from the September 2009 average. Seventy-nine percent of producer milk used in Class II carried an over-order charge.

Class and component prices (dairy programs)
The following are the December 2009 prices under the Federal Milk Order pricing system and the changes from the previous month: Class II $14.25 (up $1.01), Class III $14.98 (up $0.90), and Class IV $15.01 (up $1.76).

Product price averages used in computing Class prices are: butter $1.4459, non-fat dry milk $1.2858, cheese $1.5969, and dry whey $0.3668. The Class II butterfat price is $1.5503 and the Class IV butterfat price is $1.5433. Further information may be found at: www.ams.usda.gov/DairyMarketStatistics (select Prices, select Price Formulas – 2009).  PD

 

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