MD_DA240 DA MD DA240 FLUID MILK AND CREAM REVIEW - WEST Madison, WI December 22, 2016 (REPORT 51) In California, farm milk production is higher, in line with seasonal trends. Sales into Class 1 are trending noticeable lower as most educational institutions will be closed during the winter break. Therefore, milk is becoming more available for cheese manufacturing. With many Class 1 processing facilities shutting down throughout the holiday weekend, balancing plants are expected to be actively processing milk. With cooler temperatures averaging 77 degrees in Arizona, milk production continues trending up. Industry participants report plenty of milk is available for most manufacturing needs. Class I orders from educational institutions are lower as most K-12 schools enter the semester break. However, bottled milk demands from some restaurants are active as the upcoming holiday approaches. In New Mexico, milk output is higher, following seasonal patterns. With most schools closing during the winter break, milk sales into Class I are lower. However, bottled milk demands from some food service channels are active ahead of the upcoming holiday. Sales into Class II are down as holiday production is over and orders from retailers have been shipped and delivered. Manufacturing milk volumes moving into Class III are steady. Pacific Northwest milk production remains seasonally strong. Bottling demand has decreased due to educational institutions taking their winter breaks, but industry contacts expect that draw to resume late next week or early the following week. In the interim, a lot of the now liberated milk is finding its way into manufactured dairy product lines. The recent cold snap in the mountain states of Idaho, Colorado and Utah may have suppressed milk production a small amount as cows use their energy to keep comfortable, but so far milk production has exceeded expectations and maintained a steady, solid level. Dairy farmers report good quality feed and in good amounts. Manufacturers have plenty of milk available to them. In most cases, there is enough processing capacity to absorb the milk and not many loads of milk leave the state or immediate region. Depending on use and location, a few spot loads of milk are getting moved at slightly below Class III prices. According to the DMN National Retail Report-Dairy for the week of December 16-22, the national weighted average advertised price for one gallon of milk is $2.92. The weighted average regional prices in the Southwest and Northwest are $1.99 and $1.77, respectively. Heavy volumes of western condensed skim are clearing into NDM and MPC processing and are expected to be higher during the upcoming holiday weekend. Condensed skim utilization for cheese fortification is active. With weaker cream demand from sour cream, eggnog, and cream cheese processors, cream is becoming more available for butter making. Some manufacturers are trying to clear heavy cream volumes into churns. Multiples are steady to lower, ranging from 1.04 to 1.17. Market participants are anticipating lower cream premiums in the next few weeks. The NASS Milk Production report noted November 2016 milk production in the 23 selected states was 16.1 billion pounds, 2.6% above a year ago. Milk cows in the 23 selected states totaled 8.67 million head, 33,000 head more 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 2016 Milk Production, (USDA-NASS) (Million Lb.) % Change From 1 Year Ago Arizona 385 + 1.3 California 3,212 + 0.2 Colorado 323 + 5.9 Idaho 1,177 + 3.6 New Mexico 640 + 3.7 Oregon 202 - 1.0 Utah 166 - 4.0 Washington 527 - 0.2 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-home