MARKETS
[ BUTTER STOCKS JUMP SIGNIFICANTLY
B
utter stocks have increased significantly
as a result of P10 production surpassing
demand over the past few months, says
Patrice Dubé, Dairy Farmers of Ontario’s director of economics.
Total butter stocks grew by 10,000 tonnes in
just one month, going from 25,033 tonnes in
February to 35,809 in March. The increase
represents a 43 per cent jump. Compared with the same period last year,
butter stocks had only increased
by around 3,000 tonnes, from
16,272 to 19,062 for the same
months in 2016.
Even though the P5 has surpassed its original July target of
30,000 tonnes of butter stocks, it is
important to keep the production momentum to continue to meet the growing
demand, Dubé says, adding it is also the reason
why P5 producers were recently given one additional incentive day for each of the months
of May, June and July 2017. As well, the Ca-
nadian Dairy Commission (CDC) continues
to purchase butter with supplementary import
permits at about 1,100 tonnes per month.
Supplementary import of butter could reach
20,000 tonnes during the 2016-17 dairy year,
if import permits issued are fully utilized. These
additional imports are mostly being directed
to further processors who require, on average,
1,100 tonnes of butter per month to satisfy all
their manufacturing needs, Dubé says.
Although P5 butterfat production continues to
increase, the tight processing capacity has somewhat eased thanks to recent investments that allow the industry to process more milk, Dubé says.
Bottom line: P5 producers are encouraged
to continue with the production momentum
to ensure the industry is able to fill all current
demand, Dubé says. Demand for dairy products continues to be strong, while P5 processing capacity continues to be closely monitored.
DAIRY PRODUCTS
While butterfat demand and butter stocks are ex-
P5 UTILIZATION BY CLASS*
For February 2017 (kg of butterfat/kg of solids non-fat)
*
11.29%
1(a)
1(b)
2(b)
2.87%
5.62%
3.95%
0.66%
3(a)
5.19%
5.40%
3(b)
*7.42%
*5.93%
*2.57%
*6.78%
10.38%
14.08%
*14.43%
3.99%
4.22%
3(c1)
*5.24%
7.17%
7.89%
3(c2)
*9.69%
3.54%
3.38%
3(d)
4
*3.51%
27.36%
9.77%
*8.68%
2.46%
2.25%
5(a)
*1.94%
3.20%
0.67%
5(b)
*1.52%
1.60%
0.25%
0.29%
-0.85%
5(c)
5(d)/4(m)
*0.69%
*-0.19%
1.94%
7
0%
48
*31.81%
25.47%
11.06%
2.32%
2(a)
% Butterfat
% Solids Non-Fat
% Revenue
5%
*11.44%
22.56%
10%
MAY 2017 | MILKPRODUCER
15%
20%
25%
30%
35%
40%
45%
periencing increases, so are retail dairy products,
with the exception of fluid milk.
According to AC Nielsen sales figures for the 12
months ending March 4, 2017, total cheese sales
grew by 5.2 per cent, followed by 4.6 per cent for
cream, 4.1 per cent for butter and 2.4 per cent for
all yogurts. Ice cream products also had a slight
boost of 2.1 per cent, and fluid milk sales decreased
by 1.5 per cent for the same period.
These dairy product sales increases translate
to an increase in Canadian requirements for
butterfat. Total requirements (including milk
used toward innovation) for the 12 months
ending Feb. 28, 2017, jumped to 353.72 million kilograms of butterfat from 340.58 million kg in February 2016. However, this February 2017 figure is a slight decrease of 0.22
per cent when compared with January 2017.
The main butterfat utilization increases were in
milk, butter, cheese and cream, as witnessed in
sales of these products. The CDC forecasts the
industry will need 364 million kg of butterfat
by July 2017 to meet current demand levels.
Class 1a Homo, 2%, 1%, skim, chocolate
milk, flavoured milks, buttermilk
Class 1b Fluid creams
Class 2a Yogurt, yogurt beverages, Kefir
and Lassi
Class 2b Ice cream, sour cream, frozen
yogurt
Class 3a Fresh cheese, specialty cheese
Class 3b Cheddar cheese
Class 3ci Asiago, Munster Canadian
style (muenster), Feta, Gouda,
Havarti, Parmesan, Swiss
Class 3cii All types of mozzarella except
those declared in class 3d,
Brick, Colby, Farmer, Jack,
Monterey Jack
Class 3d Mozzarella used strictly on
fresh pizzas by establishments
registered with the CDC
Class 4a Butter and powders
Class 4b Condensed and evaporated milk
for retail sale
Class 4c New products
Class 4d Inventory, animal feed
Class 4m Domestic surplus
Class 5a Cheese for further processing
Class 5b Non-cheese products for further
processing
Class 5c Confectionery products
Class 5d Planned exports
(Class 4m is grouped with 5d)
Class 7 Milk used to process milk
ingredients
WWW.MILKPRODUCER.CA
APRIL PRICES
MONTHLY QUOTA PRICES ($/kg)
DID YOU KNOW?
• A predictable level of dairy products is imported in Canada at very
low or no tariff. Over-quota tariffs
are duties applied to prevent imports above the pre-determined level. Knowing the level of imports
allows Canadian dairy producers to
fill Canadian demand for dairy products, without producing them in
excess. Essentially, matching agricultural supply to consumer demand is what’s known as orderly
marketing. Import control is an essential pillar. The other two pillars
are producer pricing and production
discipline.
• A one per cent quota increase
equates to 16 million litres of milk.
PROVINCE
PRICE/kg
AMOUNT
WANTED/kg
AMOUNT FOR
SALE/ kg
AMOUNT
PURCHASED/kg
Alberta
Saskatchewan
$39,750
$30,100
94.75
88.00
118.50
31.77
71.00
25.00
$24,999.99
95.89
253.14
64.89
Ontario
$24,000
12,023.09
382.40
382.39
Quebec
Nova Scotia
Prince Edward
Island
New Brunswick
$24,000
$24,000
8,503.00
628.88
827.00
23.52
828.20
23.52
$24,000
60.70
53.90
53.85
$20,500
40.50
116.80
39.30
Manitoba
*Newfoundland does not operate a monthly quota exchange. Quota is traded between producers.
**There was no CDQ exchange in British Columbia since sellers were not cleared at 100 per cent.
ONTARIO DEDUCTIONS, PER HL
U.S. CLASS PRICES
For March 2017
DFO Administration
CQM Administration
DFO Research
Canwest DHI
Transportation
Market Expansion
Total Deductions
Average total net
Within
quota
Overquota
$0.635
$0.020
$0.050
$0.060
$2.600
$1.500
$0.635
$0.020
$0.050
$0.060
$2.600
$1.500
$4.865
$73.625
$4.865
$-4.865
*These figures are based on Ontario’s average
composition for March of 4.16 kg. butterfat, 3.38
protein and 5.80 other solids, rounded to the
nearest cent.
P5 AND WESTERN MILK POOL BLEND PRICES*
*There is a three-month lag reporting these figures.
$85
P5 blend price
WMP blend price
80
$80
$75
WWW.MILKPRODUCER.CA
Feb 2017
Jan 2017
Dec 2016
Oct 2016
Nov 2016
Aug 2016
Sept 2016
July 2016
June 2016
Apr 2016
May 2016
Mar 2016
72
Mar 2017
Feb 2017
Jan 2017
Dec 2016
Nov 2016
Oct 2016
Sept 2016
P5
$73.19
Aug 2016
74
July 2016
76
$78.49
$70
June 2016
WMP
$76.65
May 2016
78
Apr 2016
Blend price in $/hL
Source: USDA
ONTARIO MONTHLY PRODUCER
AVERAGE GROSS BLEND PRICE
The graph below shows the 12-month blend price for the P5
provinces and Western Milk Pool (WMP).
82
The March 2017 Class III Price,
US$15.81 per hundredweight, is equivalent to C$48.12 per hectolitre. This
equivalent is based on the exchange rate
of US$1 = C$1.34087, the exchange rate
when the USDA announced the Class III
Price.
The Class III Price is in $ US per
hundredweight at 3.5 per cent butterfat.
One hundredweight equals 0.44
hectolitres. Canadian Class 5a and Class
5b prices track U.S. prices set by the U.S
Department of Agriculture.
A total 3,637 producers sold milk to DFO in March compared with 3,757
a year earlier.
MILKPRODUCER | MAY 2017
49