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August Dairy Market Report

Dan Commodity Report, Dairy & Livestock, Industry News Release

Dairy Management Inc.FARMJune and July data and statistics from the Agriculture Department have painted an increasingly compelling picture of a slow but steady recovery in U.S. dairy markets. The national average all-milk price rose $0.30 per hundredweight in June, while the July federal order prices showed particular upward buoyancy for Class III,Class IV and even the lagged Class I prices. In the second quarter of 2016,the size of the national milking herd barely changed from a year earlier, while commercial milk use increased more than twice as fast as milk production. But, as a reminder of the painful dairy situation during the first part of the year,the Margin Protection Program margin reached its lowest bimonthly level since the program’s 2014 start. The $5.76 per hundredweight May–June margin triggered MPP payments at the $6 through $8 coverage levels. Also,exports of cheese, particularly American-type cheese, remain well down from a year ago, contributing to record inventory levels.

Commercial Use of Dairy Products

dairySales of all fluid milk products during March–May were just 0.1 percent less than a year earlier. Within this period, year-over-year sales were flat during April and rose 0.2 percent during May. Also during the period, milkfat consumption in fluid products was 2.4 percent higher than a year earlier. Domestic commercial use continues to rise for butter, other than American-type cheese, and nonfat dry milk and skim milk powder, but not for American-type cheese. The increased milkfat sales in fluid products and the higher use of butter and cheese helped lift the use of milk in all products on a milkfat basis by 2.6 percent.

U.S. Dairy Trade

Intense competition in global markets, particularly from the European Union and New Zealand, as well as persistent large gaps between domestic and world prices, continued to take a toll on U.S. cheese exports during the second quarter. Year-over-year losses in shipments to Japan accounted for almost half of the drop in exports of Cheddar and total American-type natural cheese, which includes Cheddar. Fresh cheese, including Mozzarella, accounted for a substantial portion of the drop in exports of non-American-type cheese. Shipments of fresh cheese were down, particularly those headed to South Korea and Australia.

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The Dairy Market Report is written and produced by the National Milk Producers Federation and sponsored by Dairy Management Inc. in Rosemont, Ill.