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

Farm level milk output remains mixed in California for this week. Some stakeholders report     strong milk production, while others continue to report less productive paddocks not fully     dried up from the heavy rains received to start 2023. Ample milk volumes for bottling and     other production facilities remain regionally available throughout the state. However, some     contacts report transportation difficulties due to recent winter weather conditions. Demand     is strong to steady for all Classes. According to the California Department of Water     Resources, as of February 28, 2023, the state has gotten 21.55 inches of precipitation for     the current 2022-23 Water Year, up 5.44 inches from the historical average. According to the     California Department of Water Resources, the state will start March with 23.30 million acre     feet of estimated statewide reservoir storage, which is 96 percent of the historical average     for the month. 

In Arizona, farm level milk output is steady to lighter with less favorable cow comfort weather and winter storm warnings for the southeastern part of the state. However, ample milk volumes remain available throughout the state for bottling and other production facilities. Class III demand is strong to steady, while demand for all other Classes is steady. 

Farm level milk output is steady to lighter in New Mexico. Milk volumes for processing are available throughout the area. Demand for all Classes is unchanged. 

In the Pacific Northwest, farm level milk output is steady. Despite some less favorable cow     comfort weather of late, contacts report milk production is meeting forecasted levels. Ample     milk volumes are available throughout the area. Some stakeholders report spot load sales at     below Class prices. Class III demand is strong. All other Classes have steady demand. 

In the mountain states of Idaho, Utah and Colorado, farm level milk output is steady. Idaho and     Utah had more favorable cow comfort weather, while Colorado got out of single digit     temperatures and winter storm warnings. Milk volumes remain ample throughout the area.     Demand is steady for all Classes. 

Demand for condensed skim milk is steady. Contract sales are steady, while spot market activity continues to be light. Regionally, condensed skim milk remains widely available to ample by stakeholders. Plentiful cream volumes are available for producers to keep busy production schedules. Lower end cream multiplies moved up this week, but remain below a flat market.

     Western U.S., F.O.B. Cream
     Price Range - All Classes; $/LB Butterfat:   2.2729 - 2.8949
     Multiples Range - All Classes:               0.9500 - 1.2100
     Price Range - Class II; $/LB Butterfat:      2.6078 - 2.8949
     Multiples Range - Class II:                  1.0900 - 1.2100

Thursday Morning Dairy Market Update - Further Weakness Overnight

OPENING CALLS:

Class III Milk Futures:	4 to 8 Lower
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	2 to 3 lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	1 to 3 Higher
Soybean Meal Futures:	$1 to $3 Higher
Wheat Futures:	5 to 7 Higher

MILK:

Milk futures took a hit Wednesday in reaction to lower spot prices in all categories. Buyers of cash may hold back again today waiting to see how aggressive sellers might be. Current milk supply is sufficient, keeping plants operating on full schedules. Spring flush is not too far away with Dairy Market News indicating Mid-Atlantic states are seeing some beginning to spring flush. The level of increased milk production through spring will have an impact on prices. Production has been above year-earlier levels for quite some time. Further production increases with current demand may leave milk prices floundering for some time. Weather has been good for cow comfort other than brief bouts of adverse weather than has mainly impacted the movement of milk and dairy products rather than cow comfort. Income over feed for January was $7.94 resulting in a large payment for those who chose the $9.50 coverage level under the Dairy Margin Coverage program.

CHEESE:

Prices could see further weakness as buyers may hold back another day waiting to see how aggressive sellers might be. Buyers remain unconcerned over supply as milk production is strong and manufacturing running on full schedules.

BUTTER:

The significant decline of price Wednesday may follow-through Thursday as buyers may wait for lower prices before stepping back in more aggressively. Increasing supply will keep price increases limited. Churning activity has not slowed, keeping sufficient supply for immediate demand and for building inventory for later demand.

Wednesday Closing Dairy Market Update - January Income Over Feed is $7.94

MILK

USDA released the February Federal Order class prices today with declines for all categories. Class II was announced at $20.83, down $0.78 from January. This is $2.96 lower than a year ago. Class III price was $17.78, down $1.65 from the previous month and $3.13 lower than February 2022. Class IV price was $18.86, down $1.15 from January and $5.14 below a year earlier. This is going to hurt when the milk checks come out this month. There is a strong possibility price was move lower as we progress toward spring. May, June, and July Class III futures made new lows again today as premium erodes out of the market. It is interesting to note that Dairy Market News indicates milk production in the Northeast and Mid-Atlantic states is steady to higher with some indicating milk production is ramping up towards spring flush levels. Milk supply is abundant for processing needs. Class IV futures were hit hard today posting significant losses due to the fall of butter. Class III futures were lower but without the pressure. The average soybean meal price for January was released at $482.40 per ton, up $19.55 per ton over December. Income over feed for January was $7.94 providing a substantial payment under the Dairy Margin Coverage program.

AVERAGE CLASS III PRICES

3 Month:	$17.75
6 Month:	$18.37
9 Month:	$18.84
12 Month:	$18.95

CHEESE

Cheese manufacturers in the Midwest indicate steady to strong cheese demand. Demand is being met but inventory is not building. However, this is not supporting prices are they continue to struggle. Even with inventory below a year ago on the January Cold Storage report, supplies remain historically large and cheese production is ongoing. Buyers see sufficient supplies leaving them less aggressive.

BUTTER

Price giving back what it gained since last week was a bit of a surprise. Price was anticipated to erode but not all in one day. Cream supply is abundant keeping churning active. Demand is being met and inventory is building.

OUTSIDE MARKETS SUMMARY

March corn jumped 11 cents closing at $6.4050. March soybeans jumped 13.75 cents closing at $15.0425 with March soybean meal gaining $2.80 per ton closing at $490.40. March wheat gained 5.50 cents ending at $6.97. April live cattle lost $0.35 closing at $165.12. April crude oil gained $0.64 closing at $77.69 per barrel. The Dow gained 5 points closing at 32,662 while the Nasdaq declined 76 points closing at 11,379.