Fluid Milk and Cream - Western U.S. Report 9

In California, milk production is higher than expected for this time of the year. Some contacts wonder if this is the sign of early spring flush. Plant issues in part of the state have added to the urgency of finding out-of-state homes for some of the milk. Meanwhile, in order to process more milk, some processors are making nonfat dry milk instead of skim milk powder. The ability to manage milk loads in the second quarter of the year is one of manufacturers' rising concerns. Class I sales are stable.

The Arizona dairy market is saturated with milk, cream, and condensed skim, which limits processors' abilities to take out-of-state milk. Nevertheless, they are managing to take on additional cheap milk and cream whenever possible. Milk production within the state has been increasing. Class I demand is unchanged from a week ago.

In New Mexico, weather conditions have improved, and milk transportation is going without any major issue. Balancing facilities continue to process as much milk as possible. Unexpected downtimes have prevented a few plants from taking their usual orders. A number of eastern Class I customers are taking additional loads of milk, helping with the stabilization of milk volumes in New Mexico. Overall, Class I intakes are down, but Class II and III demands are up.

Pacific Northwest milk production is heavy, and components are strong. Industry contacts say they are getting plenty of milk and cream for most processing needs. Independent milk handlers are finding it more difficult to find homes for extra milk. Bottling demand is steady. A recently released fluid product by a regional processor has been well received. Contacts hope this will help provide additional market opportunities for regional milk.

Mountain state (Idaho, Utah, and Colorado) milk production is supplying all the milk and cream that area processors can handle, and then some. Industry contacts suggest discounted loads of milk are common. Some manufacturers are reporting loads priced at $7 under Class IV. In addition, there are reports of milk being shipped out of the region at prices slightly above freight costs and some milk getting sold to feeder operations as low as $4 per hundredweight plus freight. Contacts are concerned this will lead to greater financial stress for some farmers. According to the recent NASS Milk Production report, Idaho has added 23,000 cows and Colorado 9,000 cows between January 2019 and January 2020. The dairy herd in Utah decreased by 4,000 cows in the same time frame.

There is so much condensed skim in the West that some processors are looking for ways to move it from one region to the other for drying. Abundant cream in the West is keeping butter churns full. Loads of cream continue to be moved across regions for clearing. However, freight costs are still impacting how much gets moved.

Cream multiples for all Classes are a bit lower at the top of the range. NATIONAL RETAIL REPORT DAIRY – FLUID MILK SUMMARY Advertised Prices at Major Retail Supermarket Outlets ending during the period of 02/21/2020 to 02/27/2020 Half Gallon, All Fat Tests Weighted Average Price National This Period Last Week Last Year Conventional $2.88 $2.07 $1.89 Organic $3.81 $4.17 $4.07 Regional (Conventional) Wtd. Ave. Low High Southwest $1.99 $1.99 $1.99 Regional (Organic) Wtd. Ave. Low High Northwest $3.33 $3.00 $3.99 Southwest $4.19 $3.98 $4.99 Gallon, All Fat Tests Weighted Average Price National This Period Last Week Last Year Conventional $2.96 $3.72 $2.24 Organic $6.48 $5.99 $5.31 Regional (Conventional) Wtd. Ave. Low High Northwest $1.99 $1.99 $1.99 Southwest $2.91 $1.99 $3.09 Western U.S., F.O.B. Cream Multiples Range - All Classes: 1.0000 - 1.1500 Information for the period February 24 - 28, 2020, issued weekly Secondary Sourced Information:

The NASS Milk Production report noted January 2020 milk production in the 24 selected states was 17.9 billion pounds, 1.2 percent up from a year ago. Milk cows in the 24 selected states totaled 8.82 million head, 16,000 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: January 2020 Milk Production, (USDA-NASS) (Million Lb.) % Change From 1 Year Ago Arizona 416 - 2.6 California 3,534 + 0.7 Colorado 416 + 4.5 Idaho 1,331 + 3.7 New Mexico 711 + 3.0 Oregon 220 - 0.9 Utah 183 - 5.7 Washington 577 + 0.7

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