Dairy Market News Weekly Report (DYWWEEKLYREPORT)

DAIRY MARKET NEWS

WEEK OF JANUARY 18 - 22, 2021 VOLUME 88, REPORT 3

DAIRY MARKET NEWS AT A GLANCE

CME GROUP CASH MARKETS (1/22)

BUTTER: Grade AA closed at $1.4025. The weekly average for Grade AA is $1.4163(+0.1168).

CHEESE: Barrels closed at $1.3925 and 40# blocks at $1.6100. The weekly average for barrels is $1.4456 (-0.1604) and blocks, $1.6981 (-0.2139).

NONFAT DRY MILK: Grade A closed at $1.1725 The weekly average for Grade A is $1.1925 (+0.0010).

DRY WHEY: Extra grade dry whey closed at $0.5400. The weekly average for dry whey is $0.5375(+0.0275).

CHEESE HIGHLIGHTS: Cheese production has regained momentum in the third week of the year. Growing milk supplies, with lighter Class I demand than in previous years, kept spot milk at steep discounts. Spot milk ranged from $8.50 under to $4 under. Prices last year bottomed out at $3.50 under, while two years ago slight overages were reported and the low was $2 under Class. Typically, schools returning from holiday breaks would spread milk a little thinner. However, with limited in-person activity at schools throughout the country, more milk is bound for the cheese vat. Additionally, a fairly mild winter in many parts of the country has milk levels higher ahead of the spring. Cheese inventories have grown, and even with the food box continuation announced, market tones have responded more to active production/heavy milk supplies than they have to the governmental program news.

BUTTER HIGHLIGHTS: Nationwide, butter producers are reporting similar tones this week to last week; churning is busy, as cream remains readily available. Butter production is generally heavy as runs include salted and unsalted butter. As butter interest typically declines after the holidays, demand for wholesale bulk butter is moderate and buyers generally order as needed. Having said this, retail sales are being impacted by the seasonal dip in demand. Contacts say butter inventories are steadily building into cold storage.

FLUID MILK: Western milk production is described as stable, steady, and strong. Mild winter weather has helped milk production in the East, Midwest, Idaho, Utah, Colorado, and New Mexico. Milk production in the rest of the country is growing. Midwest butterfat component levels are increasing while protein is slightly lower. Milk is available for cheese production between $8.50 to $4 under. Idaho reports discounted milk loads up to $4.50 under Class IV. Cream is readily available in the East and Central Region. California cream spot sales are steady to down and most condensed skim loads are clearing through the dryers. F.O.B. cream multiples are 1.0500 - 1.2100 in the East, 1.1500 - 1.2100 in the Midwest, and 1.0000 - 1.1800 in the West.

DRY PRODUCTS: Low/medium heat nonfat dry milk prices are higher in every facet in the East and Central Regions. Western prices are mostly higher on the range and mostly price series. Production is steady to busy. The focus is contracting, leaving limited spot market offerings. Dry buttermilk prices are steady to higher. Available dryer time is limited because nonfat dry milk is being given preference. That limits dry buttermilk production, or results in more sales of condensed buttermilk. Dry whey prices strengthened in all regions. Supplies are tight, which limits spot load availability. Export interest is strong. Whey protein concentrate 34% prices increased at the top of the price range and both ends of the mostly price series. Some buyers are looking for WPC 34% as an alternative to other dairy proteins. Production is steady to lower. Lactose prices and production are steady. Inventories are balanced. Acid casein prices strengthened at a healthy pace following China purchases, while rennet casein moved up slightly.

CONTINUED ON PAGE 1A

TABLE OF CONTENTS

Product Highlights/CME/DMN at a Glance	1	Dry Whey/WPC 34%/Lactose/Casein	6	Dairy Graphs	G1
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	February Advanced Class Prices by Order	9
Nonfat Dry Milk/Dry Buttermilk/Dry Whole Milk	5

				DAIRY MARKET NEWS PRICE SUMMARY FOR JANUARY 18 - 22, 2021
				PRICES ($/LB) & CHANGES FROM PREVIOUS PUBLISHED PRICES
Commodity	Range	Mostly	Commodity	Range	Mostly	Commodity	Range	Mostly
NDM					BUTTERMILK					LACTOSE
Central Low/Med. Heat	1.1500	1.2400	1.1800	1.2100	Central/East	1.0400	1.1100			Central/West	0.3100	0.5500	0.3500	0.4600
Change	0.0200	0.0400	0.0400	0.0250	Change	N.C.	0.0100			Change	N.C.	N.C.	N.C.	N.C.
Central High Heat	1.2600	1.3200			West	1.0400	1.1300	1.0600	1.1000	WPC 34%
Change	0.0600	0.0200			Change	0.0100	0.0600	0.0200	0.0400	Central/West	0.9100	1.1400	0.9500	1.0150
West Low/Med. Heat	1.1600	1.2275	1.1750	1.2000	WHEY					Change	N.C.	0.0375	0.0100	0.0250
Change	0.0300	N.C.	0.0350	0.0200	Central	0.4300	0.5500	0.4800	0.5000	CASEIN
West High Heat	1.2600	1.3550			Change	0.0100	0.0300	0.0100	N.C.	Rennet	3.4625	3.4950
Change	0.0500	N.C.			West	0.4400	0.5500	0.4700	0.5050	Change	0.0025	0.0050
DRY WHOLE MILK					Change 0.0100 0.0050 0.0100 0.0050	Acid	3.5175	3.9500
National	1.5500	1.7000			Northeast	0.4700	0.5200			Change	0.2075	0.3250
Change	0.1000	0.1000			Change	0.0600	0.0450			ANIMAL FEED WHEY
										Central	0.3600	0.4100
										Change	N.C.	N.C.

			DAIRY MARKET NEWS PRICE SUMMARY FOR JANUARY 11 - 22, 2021
			PRICES ($/MT) & CHANGES FROM PREVIOUS PUBLISHED PRICES
Commodity	Range	Commodity	Range	Commodity	Range
SMP			WHOLE MILK POWDER			BUTTER
W. Europe	2700	2875	W. Europe	3325	3475	W. Europe	4000	4250
Change	25	50	Change	-75	N.C.	Change	N.C.	25
Oceania	3250	3375	Oceania	3350	3400	Oceania	4700	4825
Change	200	250	Change	75	75	Change	250	300
S. America	3150	3350	S. America	3350	3450	BUTTEROIL
Change	150	225	Change	75	75	W. Europe	4700	4950
WHEY						Change	-200	-75
W. Europe	1000	1075				CHEDDAR CHEESE
Change	N.C.	25				Oceania	4000	4100
						Change	-50	N.C.

WEEK OF JANUARY 18 - 22, 2021	DAIRY MARKET NEWS	VOLUME 88, REPORT 3
	DAIRY MARKET NEWS AT A GLANCE

CONTINUED FROM PAGE 1

INTERNATIONAL DAIRY MARKET NEWS: WESTERN OVERVIEW: Western Europe sources report that 2021 began with milk production lower than one year earlier. In Germany the seasonal increase slowed, with estimates that first week January milk production dipped slightly lower than the prior week. EU milk production January

• November 2020 increased 1.7 per-cent from January - November 2019 according to CLAL data made available to USDA. Among some of the top milk producers, the percentage changes January - November 2020 compared with January - November 2019 are Germany, +0.5 percent; France, +0.6 per-cent; and Netherlands, +1.3 percent. Cheese demand in Western Europe is stronger than most manufacturers had expected. Especially high retail demand for cheese is noted, fueled by store promotions of cheese. Equally surprising is that food service demand is higher than had been expected, notwithstanding COVID-19. Strong contracting will keep cheese production active and stocks low. Cheese manufacturers would take on extra milk as it was available, but they are mostly relegated to contracted volumes.
  OCEANIA DAIRY MARKET OVERVIEW: AUSTRALIA: Australia struggled during 2020 to maintain export volumes of dairy powders, butter, and cheese. Internal Australian demand was one factor. But simmering political tensions with China, a significant export customer, are believed to have led to China looking for more sourcing elsewhere during the latter part of 2020. NEW ZEALAND: New Zealand milk production is moving lower seasonally. However, adverse weather concerns have abated. South Island sources describe soil moisture as better than normal. Pasture growth on both the North and South Islands is very healthy. Recent rains and expected rain in the coming week, give further confidence that pastures will remain healthy for grazing for some time.
  SOUTH AMERICA OVERVIEW: After a few weeks of dryness, moderate rains returned to the main dairy basins and agriculture zones of Brazil, Argentina, Paraguay, and Uruguay. These showers were beneficial to the development of corn and soybean, boosting soil moisture. This rainy climate hindered milk yields in a few farms mainly due to sanitary issues for milking herds. Nevertheless, cases of mastitis are minimal in most dairy farms. Several tambos are running operations with less milk than usual, but most of the raw milk has been shipped on time. High-er summer temperatures, which have been very discomforting to dairy herds, are also diminishing milk production. Attractive beef prices have encouraged some dairy farm operators to sell some heads into the meat industry, shrinking the size of their dairy herds. With most educational institutions closed, more manufacturing milk intakes have been moving into cheese, yogurt, and milk caramel production.
  NATIONAL RETAIL REPORT (DMN): The total number of conventional dairy product advertisements increased 18 percent, but the total number of organic dairy product ads decreased 6 percent. Total conventional cheese ads increased 10 percent this week. There were no organic reported ads for cheese in the survey this week. Conventional shredded cheese in 8 ounce packages is the most advertised dairy product this week, with a 10 percent increase in ad numbers from one week ago. Conventional ads for 1 pound print butter increased by 49 percent. The weighted average price for conventional 1 pound butter packages is $2.93, compared to $5.83 for organic 1 pound butter packages, yielding a $2.90 organic premium. For ice cream in 48-64ounces containers, the average price is $3.31 for conventional and $5.99 for organic, representing an organic premium of $2.68. The national weighted average advertised price for conventional milk in half gallons is $2.63, compared to $3.65 for organic milk half gallons, resulting in an organic premium of $1.02. Conventional milk ads decreased by 9 percent, while organic milk ads dropped by 30 percent. Milk in half gallons is the most advertised organic item this week. The total number of ads for yogurt increased by 20 percent for conventional and 145

percent for organic. The weighted average advertised price for conventional yogurt in 32-ounce containers is $2.62, compared to $3.50 for organic yogurt in 32 ounce containers. The resulting organic premium is 88 cents.

ADVANCED CLASS PRICES (FMMO): The base Class I price for February 2021 is $15.54 per cwt, an increase of $0.40 per cwt when compared to January 2021. A Class I differential for each order's principle pricing point (county) is added to the base price to determine the Class I Price. For February 2021, the advanced Class IV skim milk pricing factor is $8.57 per cwt, the Class II skim milk price is $9.27 per cwt, and the Class II nonfat solids price is $1.0300 per pound. The two- week product price averages for February 2021 are: butter $1.4765, nonfat dry milk $1.1295, cheese $1.6342, and dry whey $0.4487.

-1A-

DAIRY MARKET NEWS, JANUARY 18 - 22, 2021	-2-				VOLUME 88, REPORT 3
COMMODITY	MONDAY	TUESDAY	WEDNESDAY	THURSDAY	FRIDAY	::	WEEKLY	::	WEEKLY
	JAN 18	JAN 19	JAN 20	JAN 21	JAN 22		CHANGE		AVERAGE
CHEESE
BARRELS	No Trading	$1.5600	$1.4400	$1.3900	$1.3925	::	(-0.1800)	::	$1.4456
		(-0.0125)	(-0.1200)	(-0.0500)	(+0.0025)	::	::	(-0.1604)
40 POUND BLOCKS	No Trading	$1.8000	$1.7300	$1.6525	$1.6100	::	(-0.2200)	::	$1.6981
		(-0.0300)	(-0.0700)	(-0.0775)	(-0.0425)	::	::	(-0.2139)
NONFAT DRY MILK
GRADE A	No Trading	$1.2150	$1.2000	$1.1825	$1.1725	::	(-0.0275)	::	$1.1925
		(+0.0150)	(-0.0150)	(-0.0175)	(-0.0100)	::	::	(+0.0010)
BUTTER
GRADE AA	No Trading	$1.4050	$1.4550	$1.4025	$1.4025	::	(+0.1125)	::	$1.4163
		(+0.1150)	(+0.0500)	(-0.0525)	(N.C.)	::	::	(+0.1168)
DRY WHEY
EXTRA GRADE	No Trading	$0.5350	$0.5350	$0.5400	$0.5400	::	(+0.0100)	::	$0.5375
		(+0.0050)	(N.C.)	(+0.0050)	(N.C.)	::	::	(+0.0275)

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.USDA.GOV/MARKET-NEWS/DAIRY

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

BUTTER MARKETS

NORTHEAST

Butter production is keeping pace with the recent heavy churning at Eastern balancing plants. Current output is fulfilling butter sales and being consolidated for storage programs. Available cream supports 7 day run schedules. Most butter facilities are sufficiently stocked as inventory levels inevitably build. The pandemic environment challenges buyers and sellers beginning of the year plans for future butter needs. Demand for wholesale bulk butter is moderate. Buyers generally order as needed. Sales of wholesale bulk butter, f.o.b. East, are reported in the range of 3 to 7 cents over the CME, based on various time frames and averages. Print production is steady to light. Retail sales are being impacted by the seasonal dip in demand. Some butter manufacturers are working on completing international orders. Interest remains good. Prices had been trending incrementally lower, but saw a sharp shift following the holiday break. The current undertone indicates unsettledness in the market.

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

and Edible Butter	+0.0300 - +0.0700
Bulk Basis Pricing - 80% Butterfat $/LB:

Secondary Sourced Information:

This week, a cooperative export assistance program accepted requests for export assistance to sell 1.144 million pounds (519 metric tons) of butter.

WEST

In the West, butter production is generally heavy as runs include salted and unsalted butter. Domestic butter interest typically declines after the holidays and plants consequently experience increases in inventory, which is no exception for butter manufacturers in the region this year. Cream that is available for churning is highly sufficient, although a drop is noted in the region's surplus cream, as Class II cream-based operations shift to post- holiday production gear. Bulk butter production is active and continues to build cold storage volumes. The f.o.b. West bulk butter price is $0.0350 to $0.0750 over the market of the CME Group, with various time frames and averages used. Retail store sales are fair and expected to increase as some retail outlets are already discussing orders for the upcoming holiday. Featured activity for butter is higher this week in parts of the region. Export market trading continues to be good.

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

Bulk Basis Pricing - 80% Butterfat $/LB:

+0.0350 - +0.0750

Secondary Sourced Information:

This week, a cooperative export assistance program accepted requests for export assistance to sell 1.144 million pounds (519 metric tons) of butter.

CENTRAL

Butter producers are reporting similar tones this week to last week. Churning is busy, as cream remains readily available from the Midwestern and Western regions. Cream multiples, within the Central region, have come up week to week, but they remain accessible for the churn. Contacts say butter inventories are growing. Demand notes are following the recent trend. Retail remains steady, as holiday pipelines have been refilled. That said, food service demand notes have seen better days. Some butter producer contacts expect the food box programs to assist markets, following an $.1150 bump on Tuesday. However, they have concerns about inventories, which are growing alongside milk/butterfat yields.

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

and Edible Butter	0.0000 - +0.0500
Bulk Basis Pricing - 80% Butterfat $/LB:

DAIRY MARKET NEWS, JANUARY 18 - 22, 2021	-3-	VOLUME 88, REPORT 3
	CHEESE MARKETS
NORTHEAST		WHOLESALE SELLING PRICES: DELIVERED
	DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS))

Milk is widely available in the Northeast for Class III operations. Cheese makers' intakes are near or at capacity. Mozzarella and pro- volone cheese production is strong in the region. Manufacturers' inventory levels are steadily increasing. There are reports cheese orders are picking up. Retail cheese sales are moderate. Several retailers are receiving a steady amount of supplies each week. The foodservice sector continues to bear a softer tone. Numerous restaurants continue to work through shifting operating options. Cheese spot prices are currently mixed. On the CME Group, cheddar block and barrel prices have shifted slightly downwards. Cheese markets are unsettled.

WHOLESALE SELLING PRICES: DELIVERED

DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS))

Cheddar 40 pound Block	2.3650-2.6525
Muenster	2.3525-2.7025
Process American 5 pound Sliced	1.7050-2.1850
Swiss 10-14 pound Cuts	3.8725-4.1950

MIDWEST

Midwestern cheesemakers relayed readily available milk supplies again this week. Reported spot milk prices have already met last week's lows of $8.50 under Class, but the high end of the range ($2 under) has not been passed along at report time. Curd producers say restaurant orders moved higher, which they say is not something they have seen in months. Cheddar producers are hopeful the government awards will assist in putting a dent in their growing inventories. That said, current inventories are not overtly concerning, but producers relay that could change day to day. Cheese market tones are coming to earth after the initial runup from two weeks ago.

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

Cheddar 10 pound Cuts	2.2400-2.4400
Cheddar 40 pound Block	1.9925-2.4825
Monterey Jack 10 pounds	2.2275-2.5025
Process American 5 pound Loaf	1.7075-1.9625
Swiss 6-9 pound Cuts	3.6800-4.1100

FOREIGN TYPE

Western European cheesemakers are pleased with increased cheese production during 2020, and better yet, increases in cheese exports. The United States is a top importer of EU cheese. In fact, sustaining the export demand has kept aging stocks atypically low. While there has been added cheese production capacity in recent years, some cheese plants have not contracted enough January milk production to operate at capacity. Securing spot milk to increase cheese production is currently challenging because butter and SMP production are more profitable. Extra milk often flows into butter and SMP rather than cheese, if transportation is not problematic. Thus, there is production capacity to increase cheese production to grow exports, but for now, milk availability is constraining both production and export increases.

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

VARIETY	:	NEW YORK	:	DOMESTIC
:	IMPORTED
Blue	:	2.6400-5.2300	:	2.3725-3.8600*
:	:
Gorgonzola	:	3.6900-5.7400	:	2.8800-3.5975*
Parmesan	:	-0-	:	3.7600-5.8500*
Romano	:	-0-	:	3.5625-5.7175*
Sardo Romano (Argentina)	:	2.8500-4.7800	:	-0-
Reggianito (Argentina)	:	3.2900-4.7800	:	-0-
Jarlsberg	:	2.9500-6.4500	:	-0-
Swiss	:	-0-	:	3.9075-4.2325
Swiss (Finland)	:	2.6700-2.9300	:	-0-

* = Price change.

Blue 5 pounds	2.5475-3.6175
Brick 5 pounds	2.2800-2.7050
Cheddar 40 pound Block	2.0025-2.4025
Monterey Jack 10 pounds	2.2550-2.4600
Mozzarella 5-6 pounds	2.0800-3.0250
Muenster 5 pounds	2.2800-2.7050
Process American 5 pound Loaf	1.6900-2.0500
Swiss 6-9 pound Cuts	3.3875-3.5050

WEST

Copious amounts of milk are resulting in the production of plenty of cheese. Western cheesemakers are actively producing cheese, but an unsettled feeling persists within the market. This uncertainty has seemed to play out in some cash markets. The announcement of more government food box program purchases created an initial push upwards on cheese prices, but now, the momentum has seemed to wane. Forecasting market direction has been difficult and neither buyers, nor sellers, want to overextend themselves. Cheese inventories are abundant and able to meet most needs. However, industry contacts confirm that food service and institutional demand has remained weak. Retail demand, while better than last year, is not able to offset the reduction in cheese sales into other channels. Until sit- down dining returns, contacts expect the cheese market may be chal- lenging.

COLD STORAGE

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

01/18/2021	:	BUTTER	:	CHEESE
:	54315	86471
01/01/2021	:	45415	:	77986
CHANGE	:	8900	:	8485
% CHANGE	:	20	:	11

Secondary Sourced Information:

This week, a cooperative export assistance program accepted requests for export assistance on contracts to sell 608,476 pounds (276 metric tons) of cheese. So far this year, the program has assisted member cooperatives who have contracts to sell 1.471 million pounds of American-type cheeses in export markets. When combined with but- ter, cream cheese and whole milk powder, the program has assisted members with sales of 84.3 million pounds of milk on a milkfat basis.