FLUID MILK AND CREAM REVIEW – WEST
(USDA Market News)
In California, getting trucks to haul condensed skim and milk out-of-state has become a little easier this week compared to last week.
However, early reservations are needed to get them on time. Milk supplies remain plentiful in California although they are lower than last year. Milk production is seasonally up, but Class 1 orders are steady.
According to some contacts, current prices for cream in California are lower. Therefore, a few manufacturers are purchasing more cream to take advantage of the lower prices.
However, due to limited capacity, they cannot purchase too much. Industry participants say that Class IV orders for the upcoming festivities will start to ramp up in the weeks to come. The January 4a price (butter/powder) in California is $12.93, down $0.43 from the previous month, and $2.74 lower from a year ago.
This compares to the Federal Order Class IV price of $13.13 for January. The January 4b price (cheese) is $13.37, down $0.15 from the previous month, and $2.62 lower from a year ago.
This compares to the Federal Order Class III price for January at $14.00.
In Arizona, weather conditions are boosting cows’ well-being. As so, milk yield is trending higher to the point where processing plants are working at full capacity with not much downtimes.
Cream is also abundant in the state and active cream churning is one of the main ways manufacturers are clearing excess cream loads.
Milk output in New Mexico is steady to slightly increasing. Repair and maintenance projects at some Class III plants are causing them to take less milk. Nonetheless, handlers are redirecting some of the milk to plants that can take on extra loads.
Holdovers are currently higher, and they are expected to remain the same for the rest of the week.
Class I intakes are down while Class II demand is slightly up.
Pacific Northwest milk production is coming up slightly, following seasonal patterns. Cow comfort is favorable, and as a result, milk production per cow is solid for this time of year.
Manufacturers say milk intakes are in good balance with processing needs. Bottling demand is steady.
In the mountain states of Idaho, Utah and Colorado, milk production is steady. Industry contacts say milk intakes are in fairly good balance with processing needs, thanks, in part, to active Class II and III manufacturing.
While this gives a short-term stability to milk markets, industry contacts are concerned about the potential impact of spring flush on farmers and dairy processors.
Some farms may lose the market for their milk due to lack of processing capacity this spring. There is an added concern for farmers as they look ahead to the 2018 growing season.
The reservoirs currently have adequate volumes of water, but the mountain snowpack is below normal levels. This could signal potential shortfalls for irrigation if the region does not receive late season snowfall. Condensed skim inventories are enormous and sales seem to be lower.
In the West, some condensed skim are moving from state to state to find homes for drying. Western cream demands are mixed depending on the states. In the states with good demands, reports suggest that cream was less contracted this year, resulting in more demand for spot loads and higher multiples.
In Colorado and New Mexico, multiples are higher while in Arizona, California, Idaho and Utah they seem to be a bit lower. Cream multiples this week are 1.05-1.1.20.
According to the DMN National Retail Report-Dairy for the week of Feb. 2-8, the national weighted average advertised price for one gallon of milk is $2.88, up $0.06 from last week, and up $0.20 from a year ago.
The weighted average regional price in the Southwest is $3.99 and $1.99 in the Northwest. According to the NASS Dairy Products report, hard ice cream production in the West region for December 2017 is 9.3 million gallons, 10.5 percent lower than a month ago, and 16.5 percent below the previous year.