Fluid Milk and Cream — West

Dec. 20

California milk processors are getting prepared for additional milk balancing during the holidays. Some smaller plants will reduce their intakes or close, so more milk will be going to butter and powder plants. Regional plants are in good shape and have the capacities necessary to handle the expected extra loads of milk.

This week, milk production is even to up. Educational institutions are also closed for the holidays. As the result, Class I sales are currently down.

Recent rains in California have not much impacted milk transportation and deliveries. In general, milk yield is even to increasing. Some reports suggest that there has been a lot of shifting in supplies.

In Arizona, processing plants are running at full capacities and taking good volumes of milk. Milk supplies are increasing and seem to be higher than demand. Therefore, more milk is moving to balancing plants. Plant managers state that despite the increase in milk production, it still hasn't reached that of last year.

Fluid milk intakes are dropping with educational institutions in recess and grocery stores planning for the holidays.

In New Mexico, Class II usage wound down ahead of the holidays whereas cheese production schedules have increased to handle the additional manufacturing milk volumes.

Repair/maintenance workloads at a Class III facility caused it to miss on receiving planned deliveries of milk. Fortunately, manufacturing capacities were adequate at other locations to take on the additional milk volumes. As the result of schools' closure for the holiday break, Class I is also experiencing a reduced demand. Overall, milk production is trending higher.

Milk production in the Pacific Northwest is following typical seasonal patterns. Bottling demand is easing back as educational institutions begin winter breaks. There is plenty of milk for processing and the additional milk made available from school bottling is forcing milk handlers to implement their planned adjustments for the season.

Precipitation has moved into the region and is beginning to recharge water reservoirs.

In the mountain states of Idaho, Utah and Colorado, milk production is strong. Industry contacts say components are steady and have not come down much from seasonal highs.

There is plenty of milk for processing. Distressed loads of milk are more prevalent in the northern parts of the region. As a result, some milk loads are getting pushed into neighboring states. Some farmers have lost access to markets. A few farms have liquidated rather than face further financial stress, while others are hoping proposed additional processing can improve market conditions in the region.

Milk intakes are in better balance in the southern parts of the region. In the West, there have been some push backs of condensed skim, resulting in more supplies.

According to market participants, condensed skim is being more contracted for next year compared to this year. Cream supplies are becoming more available in the West, whereas orders are dropping. Consequently, more cream has started to move to the churns. Cream multiples for all Classes are 1.05-1.26.

 National Retail Report Dairy ± Butter Summary
     Advertised Prices at Major Retail Supermarket Outlets ending during the period of 12/14/18
     to 12/20/2018

     Half Gallon, All Fat Tests
                       Weighted Average Price
     National    This Period    Last Week   Last Year
      Organic       $3.76         $3.71       $3.87
      Conventional  $2.82         $2.33       $2.31

     Regional (Conventional)
                   Wtd. Ave.       Low         High
      Northwest      n.a.          n.a.        n.a.
      Southwest      n.a.          n.a.        n.a.

     Regional (Organic)
                   Wtd. Ave.       Low         High
      Northwest     $2.50         $2.50       $2.50
      Southwest     $3.70         $3.00       $3.99

     Gallon, All Fat Tests
                       Weighted Average Price

     National    This Period    Last Week   Last Year
      Organic       $3.99         $4.80       $6.29
      Conventional  $3.05         $3.25       $2.52

     Regional (Conventional)
                   Wtd. Ave.       Low         High
      Northwest     $2.75         $2.50       $2.99
      Southwest     $1.99         $1.99       $1.99

     Regional (Organic)
                   Wtd. Ave.       Low         High
      Northwest      n.a.          n.a.        n.a.
      Southwest      n.a.          n.a.        n.a.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0500 - 1.2600

     Information for the period December 17 - 21, 2018, issued weekly

     Secondary Sourced Information:

     The NASS Milk Production report noted November 2018 milk production in the 23 selected
     states was 16.4 billion pounds, 0.8 percent above a year ago. Milk cows in the 23 selected
     states totaled 8.72 million head, 16,000 head less than a year ago. The following table
     shows western states included in the report and the monthly milk production changes compared
     to a year ago:

     November 2018 Milk Production, (USDA-NASS)

                          (Million Lb.)      % Change From
                                               1 Year Ago

     Arizona                   394                - 1.5
     California               3272                + 2.9
     Colorado                  375                + 7.1
     Idaho                    1220                + 4.0
     New Mexico                636                - 2.9
     Oregon                    205                + 2.0
     Utah                      188                + 3.3
     Washington                552                + 6.0

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