MD_DA240
DA
MD DA240 FLUID MILK AND CREAM REVIEW - WEST

Madison, WI February 4, 2010
For the week of February 1-5, 2010 (REPORT 05)

WEST FLUID MILK 

According to the NASS Agricultural Prices for January, mid-month 
prices for baled alfalfa hay were $113/ton, $36/ton less than last 
year.  Prices for selected Western states and the change from last 
year are as follows:  Arizona $110, -$78; California $108, -$51; 
Colorado $130, -$40; Idaho $107, -$83; Nevada $100, -$82; New Mexico 
$146, -$47; Oregon $130, -$56; Utah $100, -$70; and Washington $120, -
$85.  The January 2010 4a price (butter/powder) in CALIFORNIA 
is $13.75, $1.01 lower than December 2009 but $4.22 higher 
than last year.  The January 2010 4b price (cheese) is $12.72, 
$2.32 lower than December 2009 but $3.70 higher than last 
year.  Milk production in CALIFORNIA is steady to trending 
seasonally higher.  Solid's levels of milk are also 
increasing.  Conditions are generally neutral to milk cows 
despite some wet weather and remnants of past storms.  
Processing plants in the states are handling local milk 
supplies, helped by increased plant capacity last year.  Fluid 
milk demand is steady.  Concerns over sustainability are 
resurfacing as milk prices move lower and return to levels 
under many dairy producers' costs of production.  While feed 
and hay prices are often lower, that provide little 
concession.  ARIZONA milk output is mainly building higher and 
increasing on a weekly basis.  Current weather conditions are 
nearly ideal.  Processors have capacity to take the increasing 
milk intakes, especially since levels have been running well 
below a year ago for a good part of last year.  Current 
bottled milk interest is steady and taking expected volumes of 
milk.  CREAM prices are steady to slightly lower.  The impact 
of declining butter prices and lukewarm interest for cream is 
factoring into the market.  Production of cream based dips and 
sour cream was higher ahead of the Super Bowl weekend, but is 
declining.  Ice cream production is light to moderate and 
often slow to build.  Cream volumes continue to move to the 
churns to balance the market.  At the CME, the butter price 
retreated 3.5 cents over the past week to close at $1.3450 on 
Wednesday, February 3.  Multiples for cream are unchanged at 
the 110-120 range FOB and vary depending on class usage and 
basing points.  The PACIFIC NORTHWEST weather patterns continue to 
follow seasonal norms.  An El Nino weather pattern has increased 
moisture levels further inland and is causing some sloppy cow yards.  
Production levels remain good with most manufacturing plants at year 
ago levels.  Handlers continue to balance production needs between 
plants.  Lower product prices for dry products are causing some 
concern to milk producers.  Class III futures price levels for the 
first half of 2010 remain mostly below $14.00 cwt.  That price level 
is below most production costs.  Grain prices continue to fall and 
that situation is helping to achieve breakeven points.  Hay prices are 
lower than year ago, although high quality affordable dairy forage is 
becoming harder to find.  UTAH AND IDAHO continue to produce milk 
supplies at near year ago levels.  Severe weather has not been much of 
a factor in this part of the country so far this winter.  Milk 
continues to be distributed amongst cheese manufacturers and drying 
facilities.  Farm milk prices are a concern for early 2010.  Breakeven 
levels around $15.00 cwt. are hard to achieve.  Dairies are looking 
hard for cash to purchase feed supplies and continue milk production.  
Replacement heifer prices at auction this week were firm to higher.  
Top 50 heifer average price was reported at $1420.  This is the 
highest average price since last fall. 

1100CT 
Butch.Speth@ams.usda.gov 608-250-3202
Robert.Hunter@ams.usda.gov 608-250-3217