Fluid Milk and Cream — Western U.S.

Aug. 1

Milk production in California is down, partly caused by hotter climatic conditions.
     Temperatures in some areas have reached 100 degrees this week, creating discomfort for dairy
     cows. Although milk loads are adequate within the state, there are apprehensions that it
     could become insufficient if output continues to drop. Class I sales are generally flat
     while Class II requests are strong into ice cream plants. In Arizona, the heatwave is
     ongoing, but cows get to recharge in the evening and early morning when the weather is a bit
     cooler. Therefore, milk production hasn¶t drop much in recent days. Manufacturing plants are
     not working at full capacities. Nonetheless, milk volumes are adequate for the fulfillment
     of all necessary processing obligations. Bottled milk demand is steady, but likely to
     increase as the needs to fill the pipelines for the upcoming school year arise. In New
     Mexico, Class I and III sales increased significantly while Class II demand is steady to
     declining. Overall, milk orders are trending higher, keeping the needs for balancing low.
     Milk production is somewhat down from the week before. Unscheduled repairs and maintenance
     at a Class III processing plant did not caused too much disruption to processing activities.
     The market tone is firm. Pacific Northwest milk production has remained at or near peak
     levels. Weather conducive to cow comfort and modern barns with good ventilation are making
     it possible to keep milk output volumes up. Manufacturers are very full of milk. Bottling
     demand is still in the summer processing mode because school starts are still mostly one
     month away. In the mountain states of Idaho, Utah and Colorado, milk production is very
     strong. There is plenty of milk for almost all processing needs. Any glitch in the milk
     logistics system causes milk to back up and discounted loads appear. Typical discounts are
     $4 to $5 under Class. School start ups are getting closer and bottlers are beginning to plan
     the refill of the school milk pipeline. In much of the region, educational institutions
     begin classes in mid-August. Condensed skim supplies are slightly lower in the West, but
     processing activities are taking place without any issue. The cream market in the West is
     firm. Although the majority of customers can get what they need, recent drops in milk
     volumes have raised concerns about the possibility that cream supplies could further tighten
     up, leading to cream order cancellations. Cream multiples are steady.

     National Retail Report Dairy ± Fluid Milk Summary
     Advertised Prices at Major Retail Supermarket Outlets ending during the
     period of 7/26/19 to 8/1/2019

     Half Gallon, All Fat Tests         Weighted Average Price
     National                    This Period   Last Week   Last Year
     Conventional                   $1.79        $1.95       $2.07
     Organic                        $3.63        $3.49       $4.64

     Regional (Conventional)      Wtd. Ave.       Low         High
     Northwest                      $0.99        $0.99       $0.99
     Southwest                      $1.69        $1.69       $1.69

     Regional (Organic)           Wtd. Ave.       Low         High
     Northwest                      $3.35        $2.79       $3.49
     Southwest                      $3.64        $2.79       $4.49

     Gallon, All Fat Tests              Weighted Average Price
     National                    This Period   Last Week   Last Year
     Conventional                   $2.45        $2.80       $2.61
     Organic                        $5.47        $5.45       $5.79

     Regional (Conventional)      Wtd. Ave.       Low         High
     Northwest                     $1.99         $1.99       $1.99
     Southwest                     $2.84         $2.75       $2.98

     Regional (Organic)           Wtd. Ave.       Low         High
     Northwest                     $5.00         $5.00       $5.00
     Southwest                     $5.00         $5.00       $5.00

     Regional (Organic)           Wtd. Ave.       Low         High
     Northwest                     $5.00         $5.00       $5.00
     Southwest                     $5.00         $5.00       $5.00

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.1500 - 1.3100

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