FLUID MILK AND CREAM REVIEW – WEST
(USDA Market News)
Milk production in California is steady to increasing compared to last week. Farm milk components are starting to increase. Bottling milk demand from educational institutions is trending down as they prepare to close for the Thanksgiving weekend.
However, the retail sector intakes are increasing by several loads as the holiday gets close. Processors report that they are increasing their milk intakes by adding existing dairies to the list of their suppliers. Others say that many small dairies have been selling in the past months due to lower profitability.
In Arizona, milk yield is steady to increasing although temperatures have been slightly higher than usual for this time of the year. Manufacturers are balancing their milk as scheduled. Milk orders from schools are steady, but are expected to slow down next week, as most schools will be closed for Thanksgiving.
The retail sector demand is trending up.
Industry contacts report that processors are likely to reduce total milk intakes close to Thanksgiving day. In general, milk supplies are in balance with processing obligations.
In New Mexico, unexpected repair and maintenance workloads at some Class III and IV processing plants are creating a tightness in milk hauling capacities. However, handlers report managing to redirect their surplus milk volumes to different processing plants.
Overall, farm milk production is increasing following normal seasonal patterns. Class I sales are steady while Class III demand is increasing.
Requests for Class II are trending up due to processors making more of the holiday dairy products. Pacific Northwest milk production is mostly unchanged this week. There is some uptick in demand from manufacturers and bottlers ahead of the upcoming holiday.
However, milk handlers also know they will be looking for homes for extra spot loads of milk next week as demand from single serve bottlers relaxes and some processors reduce their production schedules.
Milk production in the mountain states of Idaho, Colorado and Utah is mostly in balance with processing needs.
While some inexpensive milk is available from time to time, milk loads are currently able to find processing homes in close proximity to the milk shed. In addition, some industry contacts report a few loads of condensed skim milk coming into parts of the region to round out short term processing needs.
However, the mood is tempered with uncertainty and pathos. A few farms in Idaho have been informed they may not have a market for their milk as of the New Year. Contacts suggest a shift in milk marketing contracts and limited available processing capacity in the region may leave these farms without a home for their milk.
Western condensed skim sales are stable. Supplies are readily available in the market. Prices remain low and are causing a delay in the first quarter of 2018 contract negotiations. End/users buyers are hoping for further price decreases and are postponing contract discussions.
In the West, cream cheese, sour cream, aerated cream, and all the other holiday dairy goods usages of cream are solid. Cream continues to also move well into butter plants.
However, a number of processors stopped churning butter and opted for selling their cream in the Mexican market. In California, tanks continue to be limited for cream hauling.
This week, cream multiples for all usages are 1.06 to 1.28.
According to the DMN National Retail Report-Dairy for the week of Nov. 10-16, the national weighted average advertised price for one gallon of milk is $2.94, up $0.15 from last week, and $0.37 higher from a year ago.
The weighted average regional price in the Southwest is $2.46, with a price range of $1.89-$2.99. The weighted average regional price in the Northwest is $1.77, with no price range.
According to CDFA, December 2017 Class 1 prices in California are $17.95 in the North and $18.23 in the South. The statewide average Class 1 price based on production is $17.97. This price is down $0.54 from the previous month, and $1.26 lower than a year ago.