FLUID MILK AND CREAM
REVIEW – WEST
(USDA Market News)
In California, milk supplies are reported to be extremely tight in some areas, but steady in others. Recent heatwaves have created an uncomfortable environment for cows.
Some buyers noted not being able to get the quantity of milk they need as spot loads of milk are limited in the market. Consequently, milk prices have somewhat increased. Class 1 sales remained steady throughout the week. A few plants are doing maintenance and repair works, but their daily processing schedules are not being affected.
According to industry contacts, in recent weeks a number of dairies in California have closed while a few others have sold out to other dairies. Some domestic dairies are pushing for lower alfalfa hay prices. In addition, export buyers are bidding lower on alfalfa hay due to China’s increase of the alfalfa hay import tariff.
Recent storms in Arizona have flooded many roads. As the result, milk transportation from the dairies has been difficult. Increased humidity in the area is also putting more stress on cows.
Overall, milk production continues to drop week by week. However, milk supplies are enough to meet all processing needs. Class I milk intakes are lower, but they are expected to increase in coming weeks when the schools reopen.
To help with manufacturing duties, some processors in Arizona are taking in milk from states with higher output levels.
Several plant operators are also using the slowdown in activities to perform equipment repair and maintenance workloads.
In New Mexico, farm milk output is steady to slightly up. Class I demand has decreased.
As ice cream and frozen desert manufacturers take on more loads of cream, Class II demand increased. Class III sales are mostly steady. Heat is building into the Pacific Northwest. Some temperatures inland are expected to reach into the triple digits over the next week. Industry contacts asseverate that cow comfort has been favorable through the first half of the year, however as the canicular season begins, contacts expect milk production and components to decrease.
Current production levels are strong, and manufacturers have had no trouble getting the milk needed for processing runs.
Furthermore, although cream volumes appear to be tightening, there is still sufficient supplies of cream available for butter and Class II manufacturing.
Milk supplies in the mountain states of Idaho, Utah and Colorado are long. Although the recent heat wave in Colorado has depressed milk production, there is plenty of milk to meet most processing needs. In Idaho and Utah, milk production is still near its zenith for the year.
The nimiety of milk is spilling over into surrounding states. In addition, there are a few suggestions that some milk was discarded within the last week, likely the result of the holiday, but quite possibly also due to temporary production hiccups at several processing facilities.
In the West, condensed skim supplies are tight, and prices have increased. This could be due to lower milk output in some parts of the region and an increase in condensed skim demand for ice cream making. Cream demand has been strong in some areas, but steady in others.
Cream requests for ice cream manufacturing are the strongest at the moment. Several butter makers are selling some of their cream in lieu of making more butter. As cream availability drops in some places, butter is being re-melted for use in cheese manufacturing. Some contacts noted that some buyers are unwilling to pay the current higher prices for cream, so they are waiting to see in which direction the market will move.
According to the NASS Dairy Products report, hard ice cream production in the West region for May 2018 is 12.8 million gallons, 8.1 percent higher than a month ago, but 22.6 percent below the previous year.
According to the California Department of Food and Agriculture, the June 4a price (butter/powder) in California is $14.22, up $0.16 from the previous month, but down $1.69 from a year ago. This compares to the Federal Order Class IV price of $14.91 for June. The June 4b price (cheese) is $14.43, down $0.47 from the previous month, and $1.38 lower from a year ago. This compares to the Federal Order Class III price for June at $15.21.
According to California Department of Food and Agriculture, August 2018 Class 1 prices in California are $16.14 in the North and $16.41 in the South. The statewide average Class 1 price based on production is $16.15. This price is down $0.73 from the previous month, and $2.19 lower than a year ago.