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WEEKLY MILK PRODUCTION AND HEIFER IMPORT UPDATE – Dairy Market News  

March 12, 2010

In the Northeast and Mid Atlantic regions, mild weather is hinting of spring and milk production is increasing along seasonal trends. Class I demand is steady and manufacturing milk supplies are steady to somewhat lower, due to strong pulls from Class II plants increasing spring production schedules and preparing for the upcoming Easter and Passover holidays.   

Florida remains unseasonably cool and wet. Hay and supplemental feed stocks are being stretched thin as greener pastures are at least a couple of weeks out. Milk production is reaching its spring peak and production levels are lower than last year. Some manufacturing plants, which typically operate only during the flush, may not open or operate at reduced schedules due to the reduced production.  

Schools in Mississippi , Louisiana , and Alabama are on break, cutting into sales, but overall Southeast region Class I sales are steady. Milk production in the region has seen marginal increases, but the spring flush has yet to occur.   

Cream supplies are tight and multiples are moving higher as cream cheese and butter production are very active. Multiples are ranging from 125 to 135. Demand is more accentuated this year as Easter and Passover are respectively 5 and 10 days earlier than last year. Those seeking additional cream supplies are looking to the Southeast and Midwest for additional loads. Condensed skim demand has strengthened with increased Class II production schedules for cream cheese, yogurt and ice cream.  

Rick Whipp rick.whipp@ams.usda.gov  

Milk production in CALIFORNIA is trending seasonally higher. Output is good in the south with moderate temperatures and dryer conditions helping with cow comfort. Plants are running as expected with some additional milk demand noted from smaller manufacturers of dairy products. Fluid demand is fair.  

Milk output in the Central Valley is moving higher on a week to week basis. The biggest impact is from heifers entering the milking strings.  The lower milk prices are a downer to the producers as they again try to maintain as best they can while they wait for better returns.   

Overall milk intakes are still running below year ago levels with some areas closing the gap. Further north, milk output is steady. Producers are waiting for pasture growth and conditions to improve.  Pasturing helps lower costs of production and is eagerly awaited.   

ARIZONA milk output is steady to higher. Overall levels are moving closer to year ago output. Plants are running schedule to process the available supply. Fluid milk sales are mostly steady to school and retail accounts.   

NEW MEXICO milk production is moving higher on a seasonal basis with recent weather conditions improving. Milk is being placed to regular accounts and into local plants along expected levels.  Class I sales are steady to lower and beginning to see the effects of spring breaks.   

CREAM prices are moving higher with increases to multiples, overages, and basing points noted across marketing areas. Butter prices continue to push higher at the CME Group, closing Wednesday, March 10 at $1.4850, up 5.5 cents from a week ago.  

Demand for cream is good with tightness noted on recent weekends. Cream is moving into production of seasonal items, ice cream, and welcomed into butter production. Cream multiples range from 114-124 FOB and vary depending on class usage and basing points.   

Milk production in the PACIFIC NORTHWEST continues at normal seasonal levels. Spring weather is making for comfortable cows and slight production increases are seen in some areas. Milk volumes are sufficient for manufacturers to meet contracted needs. Butter and cheese plants continue operating on busy schedules with an emphasis on butter production currently.   

Dairy farmers are beginning preparations for spring planting and Securing new forage supplies. High quality hay is in short supply with farmers anticipating new crop supplies. Prices remain up in the air for forage needs for the new season crop. Demand for top quality hay is good, but price and ability to pay are issues that need to be addressed.  Farm milk prices remain below hoped for values and agricultural lenders are keeping a close eye on individual operations.   

Heifer prices at auction in Washington were steady to weak. Supreme quality heifers ranged $1100-$1375 at one auction. Lower prices were attributed to weak milk prices on the farm.   

UTAH and IDAHO experienced typical spring weather. Daytime temperatures in the 50's and cool nights have farmers preparing for early spring fieldwork. 

USDA has lowered their 2010 forecast milk price from last month's value. The average for Class III milk was lowered $.75 from last month's estimate, to $14.20-$14.80 for the year. This raises fears amongst milk producers as to the return to profitability timetables.  Banks continue to work with farmers to cover immediate needs.   

Replacement heifer prices at auctions were steady to weak in most cases. Top heifer prices were steady with averages for heifers sold trending lower. Lower milk prices are blamed for weak heifer prices.     

Milk supplies are adequate for manufacturing needs although excess production capacity is preventing plants from operating at maximum efficiencies.   

Butch.Speth@ams.usda.gov 608-250-3202

Robert.Hunter@ams.usda.gov 608-250-3217