Volume 37 January 5, 2018 Number 51 All eyes on Europe to impact Like us on Facebook and follow us on Twitter! global dairy prices in 2018 A By Alyssa Mitchell to show up in various product bring markets into balance might end up as a good thing? categories, making Europe a later this year.” This is less a prediction on INSIDE MADISON, Wis. — Analysts more competitive exporter of Mike McCully, owner of The NAFTA negotiations and more have their sights set on Europe product.” McCully Group LLC, New Buf- an observation as to what the as milk production there is Overall expansion in milk falo, Michigan, says while dairy market is pricing,” he says. ✦ ADPI seeks nominations for expected to result in excess production is generally ex- farmers in the United States Meanwhile, as U.S. prices Breakthrough, Merit awards. supply hitting the world market pected in the European Union are getting the signal to slow already have addressed post- For details, see page 6. and impacting dairy prices (EU) during the fi rst part of production from lower milk holiday demand, attention now ✦ DMK Group, Arla sign globally in 2018. 2018, says USDA’s Dairy Market prices, that hasn’t happened turns to what the milk supply Andrew Faulman, floor News. yet in Europe. looks like, Kurzawski says. Mozzarella agreement. manager at Rice Dairy, Chicago, Dairy Market News notes “The consensus opinion is “Europe is strong, but For details, see page 8. notes that after the quota sys- there is increasing chatter global dairy prices will post a between the U.S. and New ✦ Millennials’ food spending tem was abolished in Europe, about whether the EU will be modest recovery in the second Zealand, production estimates favors convenient options, there has been strong growth in less welcoming of adding to half of the year — but if Euro- are getting ratcheted down, not less dairy than groups. the European milk shed. intervention stocks of skim pean milk production growth up,” he says. “That will be an For details, see page 9. “Recent aggregate data re- milk powder (SMP) as 2018 continues, that recovery likely issue that keeps the bottom leased in December shows that develops. won’t happen until 2019,” Mc- from falling out on cheese.” ✦ Penn State Extension offers European milk production grew “There is growing sentiment Cully says. Cheddar barrel prices at the data tracking system for just over 5 percent year-over- favoring more milk moving into He notes that in the next few Chicago Mercantile Exchange small-scale cheesemakers. year for the month of October,” cheese and whole milk powder weeks, the EU Commission is (CME) dipped into the $1.30s, For details, see page 15. Faulman says. “That excess production,” Dairy Market expected to announce details settling at $1.3900 per pound milk I believe will continue News says. for how they will operate the on Friday. Blocks settled at “What’s happening in Eu- SMP intervention program in $1.4950. rope is not staying in Europe,” 2018. Faulman says he expects says Sara Dorland, managing “That will remove one excess milk to put pressure U.S. cheese production rises partner with Ceres Dairy Risk uncertainty from the market, on CME prices in the fi rst Management LLC, Seattle. with the other big one being the quarter. 2.8 percent over year earlier “The intervention program ongoing NAFTA renegotiation,” “To start the year, the CME policy will be key as well as any McCully says. cheese market has begun WASHINGTON — Total U.S. cheese production, excluding cottage potential direct payments to Dave Kurzawski, senior trending lower,” he says. “At cheese, was 1.055 billion pounds in November, 2.8 percent above No- farms. If Europe continues to broker at INTL FCStone, the moment, January cheese vember 2016’s 1.026 billion pounds, according to data released Thursday expand milk production at its Chicago, says the NAFTA dis- futures are trading at a pre- by USDA’s National Agricultural Statistics Service (NASS). (All fi gures current pace, that would put course may get worse before it mium to the average price of are rounded. Please see CMN’s Dairy Production chart on page 15.) a lid on 2018 dairy markets. If gets better, but he notes every spot cheese, which may be November cheese production was 2.0 percent below October 2017’s Europe adjusts its payments comment about NAFTA is fi lled indicative to premiums get- 1.077 billion pounds. When adjusted for the length of the months, No- and policy to encourage a rea- with fear. ting reported into the National vember cheese production was 1.2 percent higher than October 2017 sonable amount of milk, given “When’s the last time you Dairy Product Sales Report.” production on an average daily basis. current demand, that could heard a suggestion that NAFTA Turn to PRICES, page 14 a Italian-type cheese production totaled 454.7 million pounds in November, 3.6 percent above November 2016, according to NASS. No- vember production of Mozzarella, the largest component of Italian-type cheese production, totaled 350.4 million pounds, 3.3 percent above production a year earlier. Study notes opportunities WCMA pledges American-type cheese production totaled 401.2 million pounds in second gift for November, 0.6 percent above a year earlier. Production of Cheddar, for dairy investment in Pa. UW-River Falls the largest component of American-type cheese production, was 284.7 HARRISBURG, Pa. — An investment in additional dairy pro- million pounds, virtually the save level as a year earlier. cessing capacity in Pennsylvania could generate $34.7 million MADISON, Wis. — The Wisconsin led the nation’s cheese production with 279.2 million annually in combined revenue generation and cost savings, ac- Wisconsin Cheese Makers pounds produced in November, up 2.4 percent from November 2016, cording to an “Analysis of Economic Incentives for Additional Association (WCMA) this according to NASS. California followed with 211.0 million pounds, up Dairy Processing Capacity in Pennsylvania” study released by week announced its board 0.6 percent from its production a year earlier. dairy market analysts. of directors’ pledge of a The next three cheese-producing states in November were New The study — authored by Chuck Nicholson, adjunct associate second gift of $100,000 to the York with 77.2 million pounds, down 0.1 percent from its production a professor in the Charles H. Dyson School of Applied Economics and Foundation at the University year earlier; Idaho with 76.6 million pounds, up 3.2 percent; and New Management at Cornell University; Mark Stephenson, director of of Wisconsin-River Falls to Mexico with 64.5 million pounds, down 1.5 percent. dairy policy analysis at the University of Wisconsin-Madison; and help the school rebuild its NASS reports U.S. butter production was 145.7 million pounds in Andrew Novakovic, E.V. Baker Professor of Agricultural Economics dairy pilot plant. WCMA November, 1.8 percent above November 2016’s 143.1 million pounds and at Cornell — was commissioned by the Pennsylvania Department kicked off the fundraising 1.6 percent above October 2017’s 143.4 million pounds. When adjusting of Agriculture and the Center for Dairy Excellence as part of a drive in 2014 with its initial for the length of the months, November production was 5.0 percent comprehensive look at competitiveness and growth opportunities gift of $100,000. a Turn to NASS, page 15 Turn to STUDY, page 14 a Turn to WCMA, page 15 a © 2018 CHEESE MARKET NEWS® — This is Cheese Market News’ E-subscription and may not be forwarded to anyone other than the intended paid subscriber without the express permission of Cheese Market News (For more information, contact [email protected]) 2 CHEESE MARKET NEWS® — January 5, 2018 MARKET INDICATORS Chicago Mercantile Exchange CHEESE FUTURES* for the week ending January 4, 2018 Cash prices for the week ended January 5, 2018 (Listings for each day by month, settling price and open interest) Monday Tuesday Wednesday Thursday Friday Fri., Dec. 29 Mon., Jan. 1 Tues., Jan. 2 Wed., Jan. 3 Thurs., Jan. 4 Jan. 1 Jan. 2 Jan. 3 Jan. 4 Jan. 5 DEC17 1.646 2,721 1.646 2,721 1.648 2,721 1.648 3,009 JAN18 1.536 3,130 1.526 3,128 1.522 3,127 1.523 3,108 Cheese Barrels FEB18 1.511 3,053 1.496 3,036 1.490 3,075 1.492 3,079 Price $1.4275 $1.4000 $1.3975 $1.3900 MAR18 1.511 3,090 1.496 3,113 1.489 3,181 1.497 3,198 Change Markets -1 1/2 -2 3/4 -1/4 -3/4 APR18 1.536 2,704 1.521 2,723 1.519 2,750 1.517 2,775 Closed MAY18 1.572 2,388 Markets 1.557 2,386 1.552 2,396 1.553 2,408 Cheese 40-lb. Blocks JUN18 1.610 2,378 Closed 1.598 2,382 1.592 2,388 1.596 2,408 Price $1.5250 $1.5075 $1.4950 $1.4950 JUL18 1.651 1,607 1.645 1,621 1.645 1,625 1.646 1,636 AUG18 1.679 1,596 1.672 1,609 1.670 1,612 1.671 1,631 Change -1 1/2 -1 3/4 -1 1/4 NC SEP18 1.690 1,752 1.688 1,759 1.688 1,763 1.687 1,778 OCT18 1.698 1,428 1.698 1,439 1.698 1,439 1.698 1,439 Weekly average (Jan.