MD_DA240
DA
MD DA240 FLUID MILK AND CREAM REVIEW - WEST

Madison, WI January 12, 2017 (REPORT 2)

Milk production is slightly down in California as heavy rain swamped 
some dairy zones in the Central Valley. Milk quality has decreased a 
little bit due to muddy conditions in some dairy farm holding areas. 
Milk hauling was marginally affected with a few delays in milk 
deliveries. Nevertheless, milk volumes are more than sufficient to 
cover manufacturing needs, especially from Class 4b (cheese). Class 1 
demands from retailers are improving as some grocery stores stock up 
ahead of the upcoming holiday weekend. A positive impact of the 
current weather conditions is that snowpack across the Sierra Nevada 
is improving. In addition, the drought is easing in some areas of the 
Central Valley. Therefore, some dairy operators anticipate more water 
availability during Q2 and Q3. This week, alfalfa field works are 
inactive due to the cold temperatures. According to CDFA, February 
2017 Class 1 prices in California are $18.13 in the north and $18.40 
in the south. The statewide average Class 1 price based on production 
is $18.15. This price is down $0.63 from the previous month, but 
$3.16 higher than a year ago. Unlike California, milk yields from the 
farm are rising in Arizona, mainly prompted by comfortable daytime 
temperatures of around 66 degrees. Bottling demand, especially for 
single serve containers are up as educational institutions are 
filling pipelines. Class I requests from coffee shops and grocery 
stores are reported as strong this week. Harvesting of good/excellent 
quality alfalfa hay is active as well as planting of barley and durum 
wheat. In New Mexico, milk production is expected to climb up after 
several bands of cold and wet weather during the last weekend. Pulls 
from bottlers are strong as most schools are filling pipelines. Class 
I demands from retailers and food service are fair to good. Sales 
into Class II and III are slightly up ahead of the football playoffs 
and Super Bowl. Pacific Northwest milk production is steady and 
following normal seasonal patterns. A few bouts of cold, wet weather 
have kept a lid on milk production, but output has quickly returned 
as the temperatures moderate. Processors report milk intakes are well 
balanced with manufacturing needs. Bottling demand is steady and has 
returned to pre-holiday levels. Last week's winter storms and cold 
temperatures had a downward influence on milk production in the 
mountain states of Idaho, Colorado and Utah. Industry contacts expect 
milk volumes to recover as warmer temperatures build into the region. 
While weather events are suppressing production, manufacturers report 
there seems to be no shortage of milk available for processing. 
Contacts further report farmers are already making plans to expand or 
start new dairies in the coming months. The additional cows and 
already strong milk intakes are prompting some milk handlers to think 
about how best to balance the milk supply once the region enters into 
spring flush. According to the DMN National Retail Report-Dairy for 
the week of January 6-12, the national weighted average advertised 
price for one gallon of milk is $2.74, up 5 cents from last week and 
20 cents higher from a year ago. The weighted average regional price 
in the Southwest is $2.68. There were no reported prices for gallon 
milk in the Northwest this week. Western balancing plant managers are 
focusing operational schedules on clearing heavy condensed skim 
volumes into NDM and SMP. Condensed skim usage for cheese 
fortification is active and demand from ice cream makers is 
improving, but slowly. Cream is readily available in the West. Most of 
this cream is clearing into butter churning. With the Super Bowl 
approaching, some sour cream and cream cheese processors are starting 
to pull more cream. A few cream loads have been exported to Mexico. 
Multiples for all classes are steady, ranging from 1.00 to 1.20. 
According to the NASS Dairy Products report, hard ice cream 
production in the West region for November 2016 is 11.7 million 
gallons, 9.9% lower than a year ago, and 9.4% lower than the previous 
month. 


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