FLUID MILK AND CREAM REVIEW – WEST
(USDA Market News)
California farm milk production is growing. However, the growth rate is inferior to that of the previous year. According to some market participants, a few dairies have sold out in California in the last two months and more might sell in the coming months. The cows from the sold dairies are moving within and outside the State of California.
Inventories of hay are down. As the result, hay prices are trending up. Demand for Class 1 milk is strongly up as schools’ pipelines continue to be filled.
The December 4a price (butter/powder) in California is $13.36, down $0.26 from the previous month, and $1.43 lower from a year ago. This compares to the Federal Order Class IV price of $13.51 for December.
The December 4b price (cheese) is $13.52, down $2.00 from the previous month, and $3.07 lower from a year ago. This compares to the Federal Order Class III price for December at $15.44.
According to CDFA, February 2018 Class 1 prices in California are $15.47 in the North and $15.74 in the South. The statewide average Class 1 price based on production is $15.49. This price is down $0.60 from the previous month, and $2.66 lower than a year ago.
Farm milk supplies are in abundance in Arizona. Production continues to increase. Nevertheless, handlers are managing to find homes for their milk. Last week, some milk from Arizona cleared to California. Finding trucks and drivers to move the milk was an issue in Arizona in the last two weeks. Fortunately, the hauling problems are partly being resolved this week. Class I demand is up.
In New Mexico, although total milk output is flat this week, Class I sales were up due to the reopening of schools for the spring session. Class II and III requests are also up. Milk supplies are ample in New Mexico as shown by higher holdover rates.
Conversely, handlers suggest that the holdovers will rapidly decrease with the current strong milk orders.
Pacific Northwest milk production is steady. Processors say there is an occasional stray spot load of milk, but most milk is finding a home within the immediate region. Milk intakes are generally in good balance with processing needs. The bottling pipeline has refilled following the winter holiday break with a steady demand.
Milk production in the mountain states of Colorado, Idaho and Utah is steady to higher. Processors say there is lots of milk available and that they would not be surprised to see spot loads of milk moving at $3 to $4 under Class III prices. The continued strong milk supply only heightens concerns that some farmers may lose access to markets for their milk in the months to come. Currently, the region’s dry and temperate weather is favorable for cow comfort and will keep the milk flowing.
However, while reservoirs are in good shape right now, some in the industry are troubled that lack of a healthy snowpack may mean less water for irrigation later on, further adding to farmers’ worries.
The demand for western condensed skim is flat while supplies are increasing. Plant operators are actively churning cream in the West. Some of them are opting to churn rather than take a loss on cream sales. Cream multiples for all Classes are steady at 1.00-1.17.
According to the DMN National Retail Report-Dairy for the week of Jan. 5-11, the national weighted average advertised price for one gallon of milk is $3.01, down $0.21 from last week, but $0.27 higher from a year ago.
The weighted average regional price in the Southwest is $2.29, with a price range of $1.89-$2.49. The weighted average regional price in the Northwest is $1.99, with no price range.
According to the NASS Dairy Products report, hard ice cream production in the West region for November 2017 is 9.7 million gallons, 16.6 percent lower than a month ago, and 16.4 percent below the previous year.