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MID-WEEK MILK PRODUCTION AND HEIFER IMPORT UPDATE – Dairy Market News  
posted July 6, 2008

Throughout the region, there are reports of plenty of milk availability. This will present further challenges because some Class II plants which had recently been operating at high production levels, plan to stop operating over the holiday weekend.  

NORTHEAST milk supplies are quite ample, with some plants also being offered milk from other areas of the region. One plant operator said that there is almost too much milk available.  

MIDDLE ATLANTIC plants have ample to very heavy supplies of milk available. This is expected to last at least through next week. Some available cream is actively being offered to varied plants before buyers can be found.  

In the SOUTHEAST, dry conditions in some parts of the region have strained milk production locally. However, milk availability from surrounding areas has resulted in ample milk for demand.  

In FLORIDA, the reduction in fluid demand has meshed with available milk production to result in adequate supplies for the week.  

CONDENSED SKIM production for existing contracts continues, with little spot market activity or interest. CREAM availability eased this week. Factors cited include more milk availability due to virtually all schools now being closed, as well as an easing of Class II demand.

Many ice cream and dip manufacturers have been manufacturing heavily in recent weeks building inventory for anticipated Fourth of July holiday demand. Reports are that inventory is now considered adequate to meet holiday demand, so some manufacturers plan to close plants and not to produce ice cream over the long weekend. They are expected to assess the situation after the holiday and likely resume production, which will again create competition for cream.  

May 2008 POOL RECEIPTS of milk in CALIFORNIA total 3.45 billion pounds, 5.2% higher than last year.  Through five months of 2008, adjusted receipts are 4.0% higher than the same period in 2007. The May blend price, at a fat test of 3.63%, is $17.43, $0.86 higher than April and $0.20 more than May 2007.   

The percentage of receipts used in Class 1 products 14.39%.  The May quota price is $18.47 and the over quota price is $16.77.  These prices are $0.91 higher than April and $0.18 higher than a year ago.   

CALIFORNIA milk output patterns are steady to trending slightly lower.  Hotter weather conditions have been a factor in the seasonal milk decline. Other factors such as:  base plans, r-Bst usage declines, feed ration changes, and time in milk, are additional influences affecting the milk flow in the state. High and increasing feed costs remain a big factor and on the forefront of decision making. Class 1 sales remain at seasonal low levels and not getting any boost around the holiday.   

ARIZONA milk output is trending lower as summer weather conditions impact the milking herds along expected levels. Excessive heat warnings are in effect for many parts of the state. The biggest impact on the cows is humidity levels increasing, which negates heat abatement measures.   

CREAM markets are firm through midweek. There are expected to be additional offerings over the holiday weekend, but ahead of July 4th, cream supplies are tight with multiples and overages high and increasing. There remains a good call for cream into ice cream accounts. The CME Grade AA price closed at $1.5525 on Wednesday, July 2, up 1.5 cents from a week ago. Cream multiples moved higher to range from 116 - 134, and vary depending on class usage and basing points.   

Much warmer conditions were noted for the first time this summer in OREGON and WASHINGTON. Some record heat was noted on the west side and triple digit temperatures were common over the east side. The weather has helped crop development, but it was enough to stress some livestock.   

Manufacturing plants will be running full this holiday weekend to process the additional surplus milk. Cream demand was not as aggressive this week due to the upcoming holiday weekend. There are indications that demand will firm up again next week.   

Hay and feed prices continue to stress dairymen in the region. Some producers are paying $290/ton for dairy quality hay delivered to their operations for second cutting. Offering prices at the farm are noted between $245-265 in the Tri-cities area.   

Warm temperatures are also noted in IDAHO and UTAH. The 90's to 100's have been common for two weeks now, but there has been little animal stress noted because of very low humidity and good cooling off at night. The heat is pushing along the corn crop and aiding the regrowth for the second cutting of hay.   

Some first cutting hay is leaving Utah for California priced at $220-230 by the grower and delivering at $270-280. The freight was decent because of it being a backhaul. Milk production remains heavy with some concern noted for getting milk processed over the holiday weekend.  Heifer prices at a sale in the region are firm with the top end at $2520 and the average at $2300. The average has not been this high since the end of March.   

DonaldO.Nelson@usda.gov 608.250.3206 and Butch.Speth@usda.gov 608.250.3202