DAIRY MARKET NEWS WEEK OF DECEMBER 6 - USDA

DAIRY MARKET NEWS

WEEK OF DECEMBER 6 - 10, 2021 VOLUME 88, REPORT 49

DAIRY MARKET NEWS AT A GLANCE

CME GROUP CASH MARKETS (12/10) BUTTER: Grade AA closed at $2.1225. The weekly average for Grade AA is $2.0600 (+0.0750). CHEESE: Barrels closed at $1.6800 and 40# blocks at $1.8650. The weekly average for barrels is $1.6745 (+0.0865) and blocks, $1.8485 (-0.0090). NONFAT DRY MILK: Grade A closed at $1.6250. The weekly average for Grade A is $1.5840 (+0.0280). DRY WHEY: Extra grade dry whey closed at $0.7125. The weekly average for dry whey is $0.7035 (+0.0135).

CHEESE HIGHLIGHTS: Midwestern cheesemakers report spot milk prices were at Class III to $1 over this week. Some Midwestern plant managers relay they are hopeful for holiday milk discounts, as buying interest has been very busy and production is somewhat active. Milk availability in the region compared to last year's $8 to $4 under Class price range shows a somewhat clear difference year over year. Class I intakes are reportedly much stronger this year than last year's atypical pandemic situation, but some contacts say retail demand is stronger than even in previous years to 2020, therefore milk is being spread out, which could tighten things up moving into football playoffs and super bowl timeframe, a seasonally busy season particularly for pizza and snack style retail cheesemakers. Cheesemakers say current cheese stores are balanced, but with lighter milk relative to recent years and generally strengthening demand notes, some contacts foresee tighter cheese availability. Cheese market tones are still on uncertain grounds, as barrel prices struggle to shore up the large block-overbarrel price gap.

BUTTER HIGHLIGHTS: Cream supplies are hearty in the West and Central regions. Availability is tighter in the East, but butter makers report that in-house cream supplies are adequate for current butter production needs. Butter churning schedules are mixed. Some manufacturers are wrapping up holiday butter runs and looking ahead to 2022 Q1 butter orders. Bulk inventories are tight, with unsalted

butter proving more difficult to source than salted. Export interest is strong, and domestic butter demand is steady to higher across retail and food service sectors. Butter market tones are bullish. Across the country, bulk butter overages range from 4 to 15 cents above market.

FLUID MILK: Milk production across much of the United States is steady to higher. The exception is the Pacific Northwest, where heavy rain and flooding in some areas have decreased cow comfort, contributing to lower farm milk production. Surprisingly, Class I milk demand is also stable to higher across much of the nation. Normally, bottling demand decreases in December as school districts prepare for their long winter breaks, but that has not yet occurred. Class III manufacturers suggest milk offers have quieted. Spot milk prices in the Midwest are flat Class to $1 over Class III. Condensed skim demand is steady on the coasts, and manufacturers are working through current contracts. Cream supplies are tight in the East but become more available in the West. Some purchasers are seeking out available loads of cream in the West to fill strong year-end demand in other regions. F.O.B. cream multiples for all classes are 1.40?1.50 in the East, 1.241.40 in the Midwest, and 1.15-1.38 in the West.

DRY PRODUCTS: The price ranges for Central and East low/ medium heat nonfat dry milk (NDM) and high heat NDM were unchanged, while the Western NDM price ranges expanded. NDM markets are firm, with steady demand and limited supplies. Some contacts think markets will remain subdued until after the first of the year. Dry buttermilk prices are steady to higher. Dry whole milk prices are unchanged. Spot trading is light, and most activity is focused on filling contractual obligations. Prices for dry whey are steady to higher, with firm market tones, steady demand and limited supplies. Whey protein concentrate 34% prices moved higher. Manufacturers report there are a lot of people looking for WPC 34%, but spot availability is limited.

CONTINUED ON PAGE 1A

TABLE OF CONTENTS

Product Highlights/CME/DMN at a Glance

1 Dry Whey/WPC 34%/Lactose/Casein

6 December Supply and Demand Estimates

11

Weekly CME Cash Trading/Butter Markets

2 U.S. Dairy Cow Slaughter/Class Milk Prices/NDPSR/Futures 7 National Retail Report ? Dairy

Cheese Markets

3 International Dairy Market News

8 Dairy Market News Contacts

Fluid Milk and Cream

4 DMN Monthly Average Prices

9

Nonfat Dry Milk/Dry Buttermilk/Dry Whole Milk

5 October Dairy Products

10

Commodity NDM

Central Low/Med. Heat Change

Central High Heat Change

West Low/Med. Heat Change

West High Heat Change

DRY WHOLE MILK National Change

Range

1.5100 N.C.

1.6500 N.C.

1.5050 -0.0100 1.6450 -0.0100

1.6200 N.C.

1.8000 N.C.

1.6100 N.C.

1.7525 0.0100

1.8000 1.9400 N.C. N.C.

DAIRY MARKET NEWS PRICE SUMMARY FOR DECEMBER 6 - 10, 2021

PRICES ($/LB) & CHANGES FROM PREVIOUS PUBLISHED PRICES

Mostly

Commodity

Range

Mostly

Commodity

BUTTERMILK

LACTOSE

1.5250 1.5700 Central/East

1.3650 1.4625

Central/West

N.C. 0.0200

Change N.C. 0.0225

Change

West

1.3400 1.4500 1.3600 1.3900 WPC 34%

Change N.C. 0.0100 0.0100 0.0100 Central/West

1.5500 1.5800 WHEY

Change

N.C. N.C. Central

0.5775 0.7000 0.6425 0.6650 CASEIN

Change 0.0075 N.C. 0.0050 N.C. Rennet

West

0.6075 0.7000 0.6400 0.6900

Change

Change 0.0225 N.C. 0.0200 0.0200 Acid

Northeast

0.5800 0.6900

Change

Change N.C. 0.0075

ANIMAL FEED WHEY

Central

Change

Range

0.3300 0.5300 N.C. N.C.

1.2000 1.4525 0.0400 0.0200

4.7500 0.0100 4.9200

N.C.

4.9500 N.C.

5.6700 N.C.

0.5000 0.5200 N.C. N.C.

Mostly

0.3600 0.4500 N.C. N.C.

1.2400 1.3400 N.C. 0.0250

Commodity SMP

W. Europe

Oceania

S. America

WHEY W. Europe

Change Change Change

Change

DAIRY MARKET NEWS PRICE SUMMARY FOR NOVEMBER 29 - DECEMBER 10, 2021

PRICES ($/MT) & CHANGES FROM PREVIOUS PUBLISHED PRICES

Range

Commodity

Range

Commodity

WHOLE MILK POWDER

BUTTER

3600 3800

W. Europe

4450 4800

W. Europe

100

75

Change

100

225

Change

3675 3725

Oceania

3975 4025

Oceania

175 N.C.

Change N.C.

25

Change

2900 3400

S. America

3450 3750

BUTTEROIL

N.C. N.C.

Change N.C. N.C.

W. Europe

Change

1250 1375

CHEDDAR CHEESE

50

50

Oceania

Change

Range

5875 -50

5525 200

6250 75

5900 -750

5850 -50

7975 375

5000 150

5350 -250

WEEK OF DECEMBER 6 - 10, 2021

DAIRY MARKET NEWS DAIRY MARKET NEWS AT A GLANCE

CONTINUED FROM PAGE 1 Lactose prices are unchanged. Freight complexities and costs are the primary obstacles for selling lactose. The acid casein price range is steady. Rennet casein prices moved higher at the bottom of the range but held steady at the top of the range.

INTERNATIONAL DAIRY MARKET NEWS (DMN): EUROPEAN OVERVIEW: WESTERN EUROPE: Western European milk production is in the low season at about the time historically when trends reverse to upward. Estimates of production within the primary milk producing countries are that current weekly milk output lags this time last year. More severe COVID related actions have led to less food service demand in Germany, Austria, France, and some other countries. Less cheese has been produced in 2021 than had been anticipated. Tight supplies are expected well into Q1 2022. EASTERN EUROPE: Cumulative 2021 Poland milk production has been able to remain slightly higher than during 2020.

OCEANIA OVERVIEW: AUSTRALIA: Australian milk production through October, the fourth month of the season, continues to be disappointingly low. October is the usual high point of seasonal milk production. While there are more seasonal months to follow than have occurred so far, production will be trending lower, so making up for the past will be a challenge in the future.

NEW ZEALAND: New Zealand dairy observers characterize milk production reporting through October, the fifth month of the production season, as disappointing. While hopes are for a recovery, the typical trend of lower production month after month through the rest of the season will require a decent rebound to overcome the deficit so far. Early observations of the November results are said to suggest that when official results are released, November will offer little help.

SOUTH AMERICA OVERVIEW: South American milk production is variant by country. Argentina's milk output reports that month-tomonth milk output has slowed, but when compared to 2020, the year-todate milk output estimates remain noticeably higher.

NATIONAL RETAIL REPORT (DMN): The total number of conventional dairy ads grew by 11 percent this week, while the total number of organic ads fell by 2 percent. Conventional ice cream in 48 to 64-ounce containers is the most advertised dairy item this week. Ads for conventional cheese increased by 17 percent from last week, while there were no advertised organic cheese products present in this week's survey. The total number of conventional milk ads fell by 35 percent; organic milk ads grew by 30 percent this week. Ads for conventional gallon-sized milk, the most advertised conventional milk item, decreased by 25 percent. The number of ads for organic milk in gallon-sized containers increased by 122 percent this week.

OCTOBER DAIRY PRODUCTS (NASS): Butter production was 159 million pounds, 1.6 percent below October 2020, but 11.2 percent above September 2021. American type cheese production totaled 457 million pounds, 0.6 percent below October 2020, but 2.0 percent above September 2021. Total cheese output (excluding cottage cheese) was 1.15 billion pounds, 0.9 percent above October 2020, and 1.1 percent above September 2021. Nonfat dry milk production, for human food, totaled 125 million pounds, 11.7 percent below October 2020, and 4.6 percent above September 2021. Dry whey production, for human food, was 78.2 million pounds, 4.0 percent above October 2020, and 11.4 percent above September 2021. Ice cream, regular hard production, totaled 55.3 million gallons, 12.6 percent below October 2020, and 4.2 percent below September 2021.

DECEMBER SUPPLY AND DEMAND ESTIMATES (USDA, WAOB): The milk production forecasts are projected lower for 2021 and 2022 on lower expected dairy cow numbers and slower growth in milk per cow. Butter, cheese, and whey price forecasts for 2021 are raised from last month on current prices and strength in demand. The nonfat dry milk (NDM) price forecast for 2021 is unchanged. The 2021 Class III price forecast is raised on higher cheese and whey prices and the Class IV price forecast is raised on the higher butter price. The 2021 all milk price forecast is raised to $18.60 per cwt.

-1A-

VOLUME 88, REPORT 49

DAIRY MARKET NEWS, DECEMBER 6 - 10, 2021

COMMODITY

MONDAY DEC 6

TUESDAY DEC 7

-2-

WEDNESDAY THURSDAY

DEC 8

DEC 9

FRIDAY DEC 10

VOLUME 88, REPORT 49

:: WEEKLY CHANGE

:: WEEKLY AVERAGE

CHEESE BARRELS

40 POUND BLOCKS NONFAT DRY MILK GRADE A

BUTTER GRADE AA

DRY WHEY EXTRA GRADE

$1.6400 (+0.0375) $1.8425 (-0.0150)

$1.5625 (N.C.) $2.0125 (+0.0100) $0.6975 (N.C.)

$1.6800 (+0.0400) $1.8425 (N.C.)

$1.5675 (+0.0050) $2.0600 (+0.0475) $0.6975 (N.C.)

$1.6925 (+0.0125) $1.8425 (N.C.)

$1.5700 (+0.0025) $2.0575 (-0.0025) $0.6975 (N.C.)

$1.6800 (-0.0125) $1.8500 (+0.0075)

$1.6800 (N.C.) $1.8650 (+0.0150)

:: :: (+0.0775) :: :: (+0.0075)

:: $1.6745 :: (+0.0865) :: $1.8485 :: (-0.0090)

$1.5950 (+0.0250) $2.0475 (-0.0100) $0.7125 (+0.0150)

$1.6250 (+0.0300) $2.1225 (+0.0750) $0.7125 (N.C.)

:: :: (+0.0625) :: :: (+0.1200) :: :: (+0.0150)

:: $1.5840 :: (+0.0280) :: $2.0600 :: (+0.0750) :: $0.7035 :: (+0.0135)

Prices shown are in U.S. dollars per lb. in carlot quantities. Carlot unit weights: CHEESE, 40,000-44,000 lbs.; NONFAT DRY MILK, 41,000-45,000 lbs.; BUTTER, 40,000-43,000 lbs.;DRY WHEY, 41,000-45,000 lbs. Weekly Change is the sum of Daily Price Changes. Weekly Average is the simple average of the Daily Cash Close prices for the calendar week. Weekly Average Change is the difference between current and previous Weekly Average. Computed by Dairy Market News for informational purposes. This data is available on the Internet at WWW.AMS.MARKET-NEWS/DAIRY

NOTICE: Five days of trading information can be found at trading/agricultural/spot-call-data.html

BUTTER MARKETS

NORTHEAST

Manufacturers' in-house cream supply is adequate for satisfying the Eastern butter market holiday demand, as cream multiples for regional f.o.b. spot loads lounge in the mid to upper 1.40s. A few manufacturers will conclude their holiday butter orders this week. Churning schedules to replenish stocks for 2022 Q1 butter needs are in place. Butter output is expected to increase from higher volumes of milk moving into Class IV and the wind-up of the yearend holiday sale season. Butter production output in the Atlantic region, during October 2021, is 1.9 percent lower than the previous year. Retail holiday butter sales are reported down compared to last year, per manufacturing sources in the region. Bulk butter transactions include overages ranging 5-8 above the CME Group with various time frames and averages used. Global butter trades are active. The market undertone is inspiring for producers, as spot butter prices continue to gain ground.

Prices for: Eastern U.S., All First Sales, F.O.B., Grade AA, Conventional,

and Edible Butter

Bulk Basis Pricing - 80% Butterfat $/LB:

+0.0500 - +0.0800

WEST

In the West cream inventories are steady, with enough available to meet regional production needs. Demand for cream is strong. Some purchasers in other regions with less cream availability are, reportedly, looking for loads of cream in the West. Cream loads are reportedly facing delays due to a shortage of truck drivers. Domestic butter demand is steady to higher in both retail and food service markets. Contacts report that export demand for butter is strong. Spot butter inventories are tight, though unsalted inventories are noted to be much harder to find than salted. Butter producers are running below capacity. Some plant managers say that delays to production supplies and a shortage of labor are contributing to shortened schedules. Bulk butter overages range from 4.0 to 15.0 cents over the CME market price.

Prices for: Western U.S., All First Sales, F.O.B., Grade AA, Conventional,

and Edible Butter

Bulk Basis Pricing - 80% Butterfat $/LB:

+0.0400 - +0.1500

CENTRAL

Central butter makers report post-Thanksgiving cream availability remains somewhat hearty in the region and from the West. Still, freight options from Western cream sources are noted as limited with few signs that the situation is going to level out in the near future. Butter demand is seasonally strong, and now that cream has become more available, churning is more active. Bulk butter inventories, however, are very tight. Salted and unsalted bulk butter interest is potent. Butter market tones have undergone some bullish pressure, as they begin to edge nearer to the $2.10 mark.

Prices for: Central U.S., All First Sales, F.O.B., Grade AA, Conventional,

and Edible Butter

Bulk Basis Pricing - 80% Butterfat $/LB:

+0.0600 - +0.1500

CONTINUED ON PAGE 2A

DAIRY MARKET NEWS, DECEMBER 6 - 10, 2021

CONTINUED FROM PAGE 2

-2A-2--

Secondary Sourced Information:

DAIRY PRODUCTS REPORT ? BUTTER SUMMARY Released December 3, 2021, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA).

Butter Production ? States and United States: October 2020 and 2021

Monthly Production (1000 pounds) Percent Change from

OCT

SEP

OCT

OCT

SEP

Region

2020

2021

2021

2020

2021

United States 161,980 143,409 159,419

- 1.6

11.2

Atlantic

14,897 10,334 10,724

-28.0

3.8

Central

60,523 53,392 56,341

- 6.9

5.5

West

86,560

California 51,584

79,683 92,354 47,394 51,786

6.7

15.9

0.4

9.3

U.S. BUTTER AND MILKFAT EXPORTS (USDA-FAS)

2021 Exports % Change From

(Million Lb.) 1 Year Ago

TOTAL, OCTOBER

11.4

+107

TOTAL, JAN-OCT

106.0

Exports ? Destination Country

1 Canada

30.0

2 Bahrain

12.9

3 Saudi Arabia

9.6

4 China

8.0

5 South Korea

6.6

+131 + 88 +530 + 31 +549 +100

U.S. BUTTER AND MILKFAT IMPORTS (USDA-FAS)

(Imports for Consumption)

2021 Imports % Change From

(Million Lb.) 1 Year Ago

October Imports

Total Butter, Fats, Milk (H.S. Code 0405) 10.7

...

Butter

Quota (H.S. Code 405101000)

1.1

- 21

Over Quota (H.S. Code 405102000)

6.4

+ 21

AMF

Quota (H.S. Code 405901020)

0.7

- 43

Over Quota (H.S. Code 405902020)

0.6

- 48

Other Milk Fat

1.9

+ 19

2021 Imports

(Million Lb.)

TOTAL, JAN-OCT

106.0

Imports ? Country of Origin

1 Ireland

66.4

2 India

12.6

3 New Zealand

10.6

4 France

4.4

5 United Kingdom

3.1

% Change From 1 Year Ago

- 14 + 5 - 34 + 78 + 25 + 56

EXPORT ASSISTANCE This week, a cooperative export assistance program accepted requests for export assistance to sell 2.0 million pounds (903 MT) of butter.

VOLUME 88, REPORT 49

DAIRY MARKET NEWS, DECEMBER 6 - 10, 2021

-3-

VOLUME 88, REPORT 49

CHEESE MARKETS

NORTHEAST

Northeastern milk production has leveled off somewhat this week, but cheesemakers are generally receiving adequate supplies to maintain active production schedules. Cheese inventories are available to meet steady to stronger customer orders across sectors. Market participants expect upcoming end of year celebrations will keep seasonally elevated retail cheese sales lofted for a few more weeks. Once the holidays are in the rearview mirror, however, contact forecasts are varied. Food service demand is fairly steady overall, though recent reports suggest that news of the Omicron variant may be contributing to reduced dine-in numbers at restaurants in some locales. Barrel prices inched higher on the CME Group through Tuesday of this week while cheddar block prices, following several days of no trading, slipped lower on Monday.

The DMN Northeast November 2021 monthly average price for cheddar blocks is $2.3291, compared to $2.3808 one month ago. Processed 5# sliced average price is $1.9541, compared to $2.1043 one month ago.

WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS))

Cheddar 40 pound Block Muenster Process American 5 pound Sliced Swiss 10-14 pound Cuts

2.3125-2.6000 2.3000-2.6500 1.6900-2.1700 3.3100-5.6325

MIDWEST

Cheesemakers say spot milk offers are quiet, as milk prices have shifted higher after the holiday and post-holiday influx of spot milk. Even as multiple plants in the region are closed for maintenance, others are running busily. Staffing shortages, at least according to some plant managers, have slowly but surely begun to improve. Cheese demand is busy, meeting seasonal expectations. Some plant managers say they are likely not going to catch up on orders until the onset of 2022, when demand is expected to settle. Cheese inventories are available here and there for spot market movements, but inventories are not overly concerning. Cheese market tones remain uncertain, but they are slowly gaining momentum as barrel prices edge higher to meet mostly steady block prices on the CME.

WISCONSIN WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS))

Blue 5 pounds Brick 5 pounds Cheddar 40 pound Block Monterey Jack 10 pounds Mozzarella 5-6 pounds Muenster 5 pounds Process American 5 pound Loaf Swiss 6-9 pound Cuts

2.4975-3.5650 2.2275-2.6525 1.9500-2.3500 2.2025-2.4075 2.0275-2.9725 2.2275-2.6525 1.6750-2.0350 2.8250-2.9425

WEST

Demand for cheese in retail markets is steady. Food service demand is, reportedly, trending higher in the West. International demand for cheese is strong; contacts note steady purchasing for export to Asian markets. Port congestion and a shortage of truck drivers are causing delays to loads of cheese. Cheese barrel prices have strengthened on the CME, rising by $0.0925 since last Wednesday. Prices for 40 pound blocks of cheese have fallen by $0.0150 in the same time frame. Spot purchasers say that cheese barrel inventories are tightening, while block spot availability is unchanged. Milk is available for production in the region, allowing cheese producers to run busy schedules.

WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS))

Cheddar 10 pound Cuts Cheddar 40 pound Block Monterey Jack 10 pounds Process American 5 pound Loaf Swiss 6-9 pound Cuts

2.1875-2.3875 1.9400-2.4300 2.1750-2.4500 1.6925-1.9475 3.1175-3.5475

FOREIGN

Most anticipated January cheese production is already scheduled in Germany and France. With production as planned, some potential buyers have been unable to finalize contracts due to the lower than desired volumes planned. Current December production from manufacturers is committed. In fact, the order of the month is cuts and deletions from contracts already on the books. There is not enough cheese to satisfy all buyers. This situation is expected to continue at least through the first quarter of 2022. The result is firmed prices for buyers of cheese from Western Europe. Manufacturers hold the cards during negotiations. The constraining factor cited most often is lower milk supplies going to cheese plants. Cheese is a profitable option for milk, but milk supplies are tight. Transportation factors are less significant because less cheese manufactured leads to less cheese exported. Nevertheless, cheese going into export from Germany typically travels by truck primarily, or rail less often, to the ports of Hamburg or Rotterdam for shipment to the U.S. German sources report that there are too few trucks and drivers. Fuel is increasingly expensive. So, these non-manufacturing factors remain in play to add additional costs, or complications, to exporting cheese.

WHOLESALE SELLING PRICES: FOB DISTRIBUTORS DOCK DOLLARS PER POUND (1000 - 5000 POUNDS, MIXED LOTS)

VARIETY Blue Gorgonzola Parmesan Romano Sardo Romano (Argentina) Reggianito (Argentina) Jarlsberg Swiss Swiss (Finland) * = Price change.

: NEW YORK

: IMPORTED : DOMESTIC

:

:

: 2.6400-5.2300 : 2.3200-3.8075

: 3.6900-5.7400 : 2.8275-3.5450

:

-0-

: 3.7075-5.7975

:

-0-

: 3.5100-5.6650

: 2.8500-4.7800 :

-0-

: 3.2900-4.7800 :

-0-

:

-0-

:

-0-

:

-0-

: 3.3450-3.6700*

: 2.6700-2.9300 :

-0-

COLD STORAGE

WEEKLY COLD STORAGE HOLDINGS - SELECTED STORAGE CENTERS IN THOUSAND POUNDS - INCLUDING GOVERNMENT STOCKS

:

12/06/2021

:

12/01/2021

:

CHANGE

:

% CHANGE

:

BUTTER 35218 : 35727 : -509 : -1 :

CHEESE 77675 77388 287 0

CONTINUED ON PAGE 3A

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