MD_DA240
DA
MD DA240 FLUID MILK AND CREAM REVIEW - WEST

Madison, WI March 9, 2017 (REPORT 10)

According to dairy contacts in California, farm milk production is 
trending slightly higher this week. Fluid milk pulls from retailers 
and restaurants are still up. Contrary to the few years of drought in 
California, this year, recent rains are helping recharge reservoirs 
and guaranty water availability throughout the year. The February 4a 
price (butter/powder) in California is $15.40, down 27 cents from the 
previous month, but $2.12 higher from a year ago. This compares to 
the Federal Order Class IV price of $15.59 for February. The July 4b 
price (cheese) is $15.81, down 18 cents from the previous month, but 
$2.76 above a year ago. This compares to the Federal Order Class III 
price for July at $16.88. Milk output in Arizona is higher as weather 
continues to get warmer. Many dairy producers expect the flush season 
to hit its peak within the next three weeks. Some plant managers are 
handling their milk intakes more efficiently this week. Many dryers 
are running at full capacity. Bottled milk demand is lower as spring 
break is around the corner. Some milk is being processed into nonfat 
dry milk. In New Mexico, the dairy market is saturated with farm 
milk. Milk pickup volumes are building up from week to week. The 
requests for farm milk are lower than the supplies. Handlers are 
actively looking for additional sales outlets, including spot sale 
opportunities to avoid, as much as possible, discarding milk. They 
are also selling their milk to calf farms to release some pressures 
and free up trailers for milk pickups. A few plants have weather or 
internal issues that slowed down their daily activities. In addition, 
one cheese processing plant has a short-term expansion project that 
reduce its milk intakes. Farm milk is clearing into condensed skim, 
cream, and cheese. Interests from Class II and I buyers are down this 
week. Sales into Class III are slightly higher. Inventories are high 
and continue to build up. Pacific Northwest dairy contacts say milk 
is readily available in the area. Farm milk production is rebounding 
as warmer temperatures build into the region. Some industry contacts 
suggest the area could have very heavy milk supplies within the next 
month if the weather patterns hold. Bottling demand is steady and 
following seasonal patterns. In the mountain states of Idaho, Utah, 
and Colorado, most milk is finding a home within the region. Milk 
production is strong and growing to meet processing capacity 
expansion in Colorado. A mild winter and good snowpack in the 
mountains has set up favorable milk production conditions in the 
area. Northern Utah and Idaho have had harsh winter weather over the 
last few weeks. Alternate periods of cold, snow, thawing and flooding 
have suppressed milk production. Industry contacts say, however, milk 
production is coming back strongly with more favorable temperatures. 
Milk intakes are generally adequate for most processing needs. A few 
contacts report milk handlers are offering loads from the Midwest and 
Southwest into the region. Condensed skim processing is increasing in 
the West. However, due to limited capacity, some manufacturers cannot 
afford to dry too much condensed skim. The sales are flat this week. 
Due to a higher supply of milk in the western market, the cream 
supply is abundant this week, and it is expected to further increase 
in the coming weeks. According to some contacts, more cream has been 
available this year in the region compared to other years. 
Manufacturers are actively transforming their cream into butter. In 
addition, cream volumes moving into ice cream and sour cream 
processing plants are improving. Many processors are finding it 
difficult to sell their cream. Cream multiples range 0.98-1.20. 
According to the DMN National Retail Report-Dairy for the week of 
March 3-9, the national weighted average advertised price for one 
gallon of milk is $3.11, up 80 cents from last week and 73 cents 
higher from a year ago. The weighted average regional price in the 
Southwest is $1.99, with no price range. The weighted average 
regional price in the Northwest is $2.11, with a price range of 
$1.69-2.39. According to the NASS Dairy Products report, hard ice 
cream production in the West region for January 2017 is 14.3 million 
gallons, 6% higher than a year ago, and 28.8% higher than the 
previous month. 

1100CT Florence.KoneGonzalez@ams.usda.gov (608)422-8594 
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