Fluid Milk and Cream - Western U.S. Report 14

Milk outputs in California continue on a strong tone. Supplies are abundant and handlers are struggling to find homes for their milk. Bottled milk and Class III demands have slowed down compared to last week. Many processing plants are running at full capacities as they attempt to make sure no milk goes to waste. Milk balancing is very active. 

In Arizona, milk outputs continue to be strong. Class I orders are close to stable as retailer demands are offsetting the fact that educational institutional intakes are non-existent. Milk supplies are     plentiful in the state and processors are not looking to buy any out-of-state loads. Class II sales are trending lower. 

In New Mexico, milk supplies are unchanged from last week. Production is stable to increasing. Class I sales are declining because end-users have stopped binge buying in the retail stores. Class II demand is steady to a bit up, whereas Class III sales are lower than usual. Balancing needs have augmented above normal levels. Haulers are moving milk with minimal obstacles. According to industry contacts, several days ago, government agencies provided waivers for haulers to resume their milk delivery operations. 

With Pacific Northwest milk output steady to seasonally rising, manufacturers are trying to encourage farmers to ease back on production. Some manufacturers have increased their overbase program penalties. A few processors say they have received requests for tolling arrangements or offers of extra milk or cream, but they cannot take on more risk without a secure market in which to sell finished goods. Retail channels for Class I and Class III have been pulling hard at milk supplies, but industry contacts say they are starting to get filled and pushing back on orders. More milk is moving toward Class IV uses. Cream multiples are eroding. A few contacts report multiples as low as .50 and some sales are priced on a day of shipment basis. 

In the mountain states of Idaho, Utah, and Colorado, milk production is still slowly rising along seasonal patterns. As the retail pipelines for bottled milk and processed dairy products fill back up, discounted spot loads in Idaho have once again become prevalent. Industry contacts say they have bought a few loads of spot milk at $9 under Class IV. And some relay they have had to turn down milk loads discounted to $10 under Class IV because they have no room for the milk and cannot absorb the market risk. Milk handlers report milk and cream being discarded. 

In the West, in-house condensed skim processing is increasing as spot buying is becoming rare. Processing capacities are being utilized to the maximum. Many plant managers continue to look for outside sale outlets. 

The western cream market is weak. Many discounted loads of cream are going to buyers' accounts because sellers are selling at whatever price they can to prevent cream from hitting the ground. As the result, cream multiples for all Classes are very low this week.

     Advertised Prices at Major Retail Supermarket Outlets ending during the period of 03/27/2020 to 04/02/2020

     Half Gallon, All Fat Tests      Weighted Average Price
     National                  This Period  Last Week   Last Year
     Conventional                $1.38        $1.45       $1.55
     Organic                     $3.95        $3.82       $4.33

     Regional (Conventional)    Wtd. Ave.      Low         High
     Northwest                   $1.18        $0.99        1.25
     Southwest                    n.a          n.a.        n.a.

     Regional (Organic)         Wtd. Ave.      Low         High
     Northwest                    n.a.         n.a.        n.a.
     Southwest                   $4.07        $2.99       $4.99

     Gallon, All Fat Tests           Weighted Average Price
     National                  This Period  Last Week   Last Year
     Conventional                $4.01        $3.72       $2.46
     Organic                     $5.00        $5.00       $6.99

     Regional (Conventional)    Wtd. Ave.      Low        High
     Southwest                   $2.98        $2.98       $2.98

     Regional (Organic)         Wtd. Ave.      Low        High
     Northwest                   $5.00        $5.00       $5.00

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               0.5000 - 1.0000

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