MD_DA240
DA
MD DA240 FLUID MILK AND CREAM REVIEW - WEST

Madison, WI January 7, 2016 (REPORT 1)

Rainy conditions have been present throughout the week in the Central 
Valley. As a result, California farm level milk production is steady 
to lower. Sales into Class 1 are steady to higher as K-12 schools are 
reopening during the current week. Heavy milk volumes are clearing 
into butter/powder processing plants. Condensed skim demand from 
yogurt manufacturers is increasing. Some dairy operators are 
stretching feed supplies until the new alfalfa hay crop becomes 
available in late Q1. At this point, dairy operators are importing 
hay from nearby states. The December 4a price (butter/powder) in 
California is $14.55, down $2.02 from the previous month and last 
year. This compares to the Federal Order Class IV price of $15.52 for 
December. The December 4b price (cheese) is $12.90, $1.53 lower than 
last month and $1.88 lower than last year. This compares to the 
Federal Order Class III price for December at $14.44. Numerous rain 
showers are marginally lowering milk yields in Arizona. Class I sales 
are increasing as schools are back in session. Demand for Class II is 
seasonally lower. Condensed skim volumes into NDM are steady to 
higher. Farm level milk output is lower in New Mexico. A significant 
number of dairy cows died last week due to the adverse impact of 
winter storm Goliath. Producers expect more deaths during this week 
and in the short term. Consequently, manufacturing milk volumes are 
down. However, some industry participants are anticipating some 
stability during next week. Demand for Class I is higher, but steady 
for Class II. According to the DMN National Retail Report-Dairy for 
the week of January 1-7, the national weighted average advertised 
price for one gallon of milk is $2.25, $2.30 in the Southwest and 
$1.88 in the Northwest. Pacific Northwest milk production is 
following seasonal trends. Several recent cold days have pushed milk 
production down a bit, but processors report plenty of milk for 
immediate needs. With many schools resuming sessions after winter 
break, bottling demand has increased. Utah and Idaho milk production 
is steady. Dairy contacts say the snowpack in the mountains exceeds 
the snowpack of last year. Many farmers are optimistic the snow will 
provide the water needed for next year's irrigation needs. Bottled 
processing is making cream more available in the West. Cream volumes 
are readily clearing into churns. Some ice cream plants are also 
taking some cream loads to restart production. Interest from sour 
cream and aerated cream makers is weakening. Some dairy operations 
are choosing to churn cream instead of selling at low prices. 
Multiples for all classes are lower, ranging from .95 to 1.22. At the 
CME Group, Grade AA butter price on Wednesday closed at $2.0375, 2.75 
cents down from a week ago. 


1100CT Angel.Teran@ams.usda.gov 608-557-7011
Mike.Bandli@ams.usda.gov 608-557-7010
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: http://www.ams.usda.gov/market-news/dairy
Dairy Market News database portal: http://www.marketnews.usda.gov/mnp/da-
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