DairyBusiness Update: July 8, 2014Print
Dairy Products Report is Neutral, However……
Stronger cheese production in May has likely helped nudge prices lower from their extreme highs earlier this year but nothing is suggestive that we will break out of the current range between $1.90-$2.10 in the near term, says HighGround Dairy’s Eric Meyer.
Increasing cheese production is delivering more whey which has dry whey processing on the rise. We may be reaching a point where dry whey also begins to see some price declines as NDM and WPC have done in recent months. Butter production saw a major upward revision in April but inventories remain well-behind last year. And NDM/SMP production is also showing strong uptrends as well.
Given the high prices seen thus far in 2014, the May Dairy Products report provides little to suggest a major move is imminent for any commodity and therefore we are calling this report neutral versus market expectations. However, given recent product production trends, it becomes more apparent to us there may be more downside price risk on the horizon for most US dairy commodities once the summer months are behind us.
To read Meyer’s complete analysis, write him at email@example.com.
CWT Sending More Dairy Products Offshore
Cooperatives Working Together (CWT) accepted 21 requests for export assistance today from Dairy Farmers of America, Land O’Lakes, Michigan Milk Producers Association, Northwest Dairy Association (Darigold) and Tillamook County Creamery Association to sell 15.615 million pounds of Cheddar, Gouda, Monterey Jack cheese, 1.246 million pounds of butter (82% butterfat) and 837,757 pounds of whole milk powder to customers in Asia, Europe, the Middle East, North Africa, South America and Oceania. The product will be delivered through January 2015.
Year-to-date, CWT has assisted member cooperatives in selling 74.377 million pounds of cheese, 48.767 million pounds of butter and 15.406 million pounds of whole milk powder to 41 countries on six continents. These sales are the equivalent of 1.926 billion pounds of milk on a milkfat basis.
Milk Production is Up ‘Down Under’
Fonterra’s Global Dairy Update reports that North Island collection in June reached seven million kgMS. This was 13% ahead of June last Season. Volumes were up on last Season as more farmers continued to milk into winter compared to the previous Season. South Island collection reached two million kgMS, 2% ahead of June last Season. Only a small number of South Island farmers provide milk in winter for New Zealand’s internal supply.
Milk collection across Australia for the 12 months to 30 June 2014 reached 120 million kgMS, meeting the same level as the previous Season, despite being down considerably in the spring. Milk production in Australia increased in the second half due to more favorable market and pasture growth conditions along with additional farms electing to supply Fonterra. As a result, collection in June was 16% ahead of June last Season.
Restaurants Teaming With California Milk Advisory Board
The National Restaurant Association has announced that the California Milk Advisory Board (CMAB) has become the first commodity board sponsor of the Association’s award-winning Kids LiveWell program, a voluntary industry-wide initiative designed to help make the healthful choice the easy choice when dining out with children. The National Restaurant Association applauded CMAB for its longstanding efforts to promote the importance of dairy products as part of a balanced diet.
“The new partnership between Kids LiveWell and the California Milk Advisory Board offers valuable and exciting opportunities to promote the integral role that low-fat dairy plays in building a healthful meal – particularly for growing children,” said Joan McGlockton, Vice President, Industry Affairs & Food Policy, National Restaurant Association. “The sponsorship shows the reach of the Kids LiveWell program across the entire food industry and will help current participants and restaurants looking to join the program by identifying low-fat dairy options that provide important nutrients for the youngest of those we serve in restaurants every day.”
“We’re pleased to be a part of a program that promotes nutritious and wholesome restaurant meals for children,” said Jennifer Giambroni, Director of Communications for the CMAB. “Milk and dairy products are an essential part of healthy eating and developing good eating habits early on can help children make their own healthy food choices later in life. In addition to being full of flavor, California milk and other dairy products are an excellent source of calcium and other important nutrients like vitamin D, phosphorus, riboflavin and protein.”
The 2010 USDA Dietary Guidelines recommend Americans build a healthy plate with nutrient-rich foods, including low-fat or fat-free dairy. Dairy products such as milk, cheese and yogurt contribute essential nutrients that are important for the good health of both adults and children.
The NRA launched Kids LiveWell in 2011 to help restaurants highlight their better-for-you menu choices for children. To join the program, restaurants agree to offer and promote a selection of healthful menu items that meet nutrition criteria based on leading health organizations’ scientific recommendations, including the USDA Dietary Guidelines.
Kids LiveWell was developed in collaboration with Healthy Dining, whose team of registered dietitians works with restaurants to identify and validate the qualifying menu choices. Participating restaurants and their qualifying items can be found on HealthyDiningFinder.com, and also via a free Kids LiveWell app in the Android Market and iTunes app store. Currently, Kids LiveWell includes more than 145 restaurant brands representing more than 42,000 locations nationwide.
Mielke Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update Associate Editor Lee Mielke)
The cheese world is in a little better balance today as the Cheddar blocks are back on top of the Cheddar barrels but not by much. Four trades took the blocks down to $1.95/lb. this morning, but another car sold at $1.9525/lb. and the final sale was at $1.9550/lb., unchanged for the first time in 6 successive sessions of decline. A bid at $1.95/lb. went unfilled. The barrels saw 6 trades, the first two at $1.9850/lb., where they have been since last Wednesday. The next two loads were at $1.98/lb. with the final two sales at $1.9450/lb., down 4¢ on the day and 1¢ below the blocks. Typically they are 3-5¢ below the blocks.
Cash butter, after inching up 0.5¢ yesterday, lost 1¢ this morning, slipping to $2.3850/lb. Six cars traded hands; the first at yesterday’s $2.3950/lb., the second at $2.39/lb., with four more cars going for $2.3850/lb. Two loads were offered at $2.3850/lb. but no one bought.
FC Stone risk management consultant, Ryan Cox, wrote in this morning’s Insider Opening Bell that Foreign Ag Service (butter) export numbers “reflect an increase in exports overall which is supportive to the market. And with heat on the horizon, some excess milk and continued strength in the export market has both end users and producers taking a wait and see approach."
Cash powder remains at $1.7725/lb., with 1 car selling today at that price and a car offered at that price but going nowhere.
Today’s Market Closing Prices
Butter: Down 1¢, to $2.3850/lb.
Cheddar blocks: Unchanged, at $1.9550/lb.
Cheddar barrels: Down 4¢, to $1.9450/lb.
Grade A nonfat dry milk: Unchanged, at $1.7725/lb.
Class III milk (prelim.): July $21.32/cwt., -5¢; Aug. $20.53, -13¢; & Sept. $20.19, -17¢. Based on today’s CME settlements, the Third Quarter 2014 average now stands at $20.68, -12¢ from Monday. The Fourth Quarter average is now at $19.70, -14¢ from Monday. The First Quarter 2015 average is now at $18.37, -2¢ from Monday.
The Agriculture Department issues its weekly National Dairy Products Sales Report prices tomorrow. The California Department of Food and Agriculture announces its August Class I milk prices on Thursday. The monthly Crop Production report and the World Agricultural Supply and Demand Estimates (WASDE) reports are issued Friday. The WASDE will include USDA’s latest projections for 2014 and 2015 milk production and milk prices.
Wednesday on DairyLine:
Dr. Brent Cousin, of Boehringer Ingelheim Vetmedica, pays us a “Vet Visit.”
Dr. Randy Shaver, Professor - UW Madison & Extension Dairy Nutritionist.