May 11, 2012
  

Commodity Markets: CME and California Plants

Average AA Butter NFDM 40# Blocks Barrels Dry Whey
Mar $1.4734 $1.3292 $1.5200 $1.5239 $0.5431
Apr $1.4403 $1.2895 $1.4969 $1.4575 $0.5153
May $1.3302 $1.2416 $1.5208 $1.4544 $0.4963
May 11 $1.3200 $1.2531 $1.5000 $1.4500 $0.4963
Week's Change UP
1.00˘		 UP
1.89˘		 DOWN
3.50		 DOWN
2.00˘		 NO
CHANGE

Estimated* California Producer Prices

Month Class 1 4a 4b Overbase Quota
Mar $17.76 $15.33 $13.67 $14.58 $16.28
Apr $17.36 $14.72 $13.43 $14.13 $15.83
May $17.09 $13.96 $13.62 $13.89 $15.59
* Actual announced prices are in BOLD; estimates are in Italics.

Butter

During the week, the CME cash butter prices dipped to the lowest level ($1.3000) since October 2009, but firmed to $1.3200 by weeks’ end. Many butter producers are stating that cream offerings are surpassing their capacity. Current churning is generating butter stocks that are outpacing demand, thus clearances to inventory are occurring. In many instances, butter producers are generating bulk versus print, especially if they know the end location at this time is inventory. Butter demand is fair at best.

Cheese

Cheese production levels remain high as milk looks to find a home away from Class IV production. Discounts are being offered to prompt cheese plants to take on extra milk. Cheese plants are cautious without the discounts to build inventories. Domestic sales are moderate as some buyers are waiting to see if prices will go lower before committing to added purchases. Export sales remain above year ago aided in part by CWT assistance. Cash trading at the CME Group this week has been mostly lower, but firmed slightly by weeks’ end with the bulk of the activity taking place in barrels.

Milk Production

Milk production in the Northeast and Mid-Atlantic regions has leveled off and indications are the two regions are at or near the seasonal peak. Manufacturing milk supplies remain heavy. Class I demand is steady. Active yogurt production is adding to the cream supply and contracted cream deliveries are at increase volumes. Spot milk availability in the region declined while sales into ice cream and ice cream mix facilities increased. Milk production in California remains uneven. Areas in northern California are seeing milk production move higher, while other areas are generally flat to occasionally lower.

Dry Products

Central nonfat dry milk prices are unchanged to lower on a continued weak market. Eastern NDM production schedules remain very active, leading to building inventories which keeps downward pressure on prices. Western low/medium heat NDM milk prices moved lower on light trading, with a weak undertone. Central dry buttermilk prices are unchanged to lower. Eastern dry buttermilk inventories are increasing and putting significant pressure on prices. In the west, dry buttermilk prices trend lower and the market tone remains weak in light trading.

Source: USDA Dairy Market News