MD_DA240
DA
MD DA240 FLUID MILK AND CREAM REVIEW - WEST

Madison, WI September 4, 2008
For the week of September 1-5, 2008 (REPORT 36)

WEST FLUID MILK

The NASS survey indicates that alfalfa hay prices for Mid-
August for the U.S. average $180/ton, up $45 from last 
year.  Prices for selected Western states and comparisons 
to last year are as follows:  Arizona $187, +$41; 
California $214, +$56; Colorado $170, +$30; Idaho $215, 
+$75; Nevada $196, +$55; New Mexico $189, +$29; Oregon 
$216, +$71; Utah $180, +$50; and Washington $240, +$100.  
The NASS Milk-Feed Ratio (pounds of 16% mixed dairy feed 
equal in value to 1 pound of milk) for August is 1.89.  
The ratio for August 2007 was 3.19.  The rule of thumb is 
that if the ratio is above 3.0 dairy producers should be 
in reasonable shape financially.  The ratio has now been 
below 3.0 since December 2007 and has been below 2.0 since 
April 2008.  The ratio has never been as low as it has 
been this summer since calculations were begun.  The 
August 4a price (butter/powder) in CALIFORNIA is $16.24, 
$0.16 higher than July but $4.97 lower than last year.  
The August 4b price (cheese) is $16.14, down $1.63 from 
July and $3.27 lower than last year.  CALIFORNIA milk 
production trended lower due to recent hot weather 
conditions.  Some handlers were seeing declines from 3-7%.  
Conditions were starting to improve with lower nighttime 
temperatures being noted.  Some milk has begun to return.  
Surplus milk supplies are limited and some manufacturers 
would even like to have additional milk.  Class 1 sales 
have picked up as more schools and colleges are serviced 
as new terms begin.  Retail sales are flat to slightly 
higher.  ARIZONA milk output is holding steady and 
continues to be affected by recent hot and humid weather 
conditions.  Some of the weather is clearing and milk is 
expected to rebound from seasonal low levels.  Also, 
milkfat and protein levels are beginning to improve.   
There are very limited amounts of outside milk moving into 
the state for processing.  Class I demand has improved to 
service school accounts.  CREAM markets were weak over the 
holiday weekend and then began to moderate as the week 
progressed.  Buying interest has slowed from accounts 
making higher class items.  Butter churners welcome extra 
cream as they fill orders for current and future needs.  
The CME Grade AA butter price closed at $1.6550 on 
Wednesday, September 3, up 4.5 cents from a week earlier.  
Multiples range from 120-136 and vary depending on class 
usage and basing points.  Cool weather in the corn growing 
areas and some hay areas in the PACIFIC NORTHWEST has some 
dairy producers concerned.  They feel that corn is behind 
enough that it will not reach full maturity and therefore 
reduce the feed value in rations.  Hay growers are 
concerned that they will not get a final cutting of hay 
which will further tighten overall hay stocks.  Components 
on farm milk output are lower than anticipated and milk 
production continues to decline seasonally.  Plants are 
able to operate efficiently with the available supplies.  
Some rain was common over parts of UTAH and IDAHO over the 
past weekend.  It is the first measureable rain in weeks.  
Night time temperatures are becoming much cooler.  This is 
reducing any stress on the milking herd, but it does raise 
the concern on getting crops mature.  Plants are able to 
acquire additional loads of milk if they desire so that 
they are able to control inventories of finished product 
very well.  Heifer prices at a weekly sale in the region 
have shown some weakness recently.  The top price was 
$2300 with the average at $1900 last week.  The average 
has not been below $2000 since January.  Looking at five 
weeks of data, the average of the top prices was $2398 and 
the top 50 average was $2032.

1100CT DonaldO.Nelson@usda.gov 608.250.3206 and 
Butch.Speth@usda.gov 608.250.3202