Madison, WI September 14, 2017 (REPORT 37)

Farm milk output in California dropped significantly because of a recent heat wave. Supplies are a little tight, and contacts report that many large manufacturers decreased their workweek to ease milk
processing. Class I demand is steady to slightly up. Industry contacts report that a few Californian dairies were sold out this week. More dairies are expected to be sold in the coming months due to lower milk price projections.

Higher quality alfalfa hay supplies are tighter while demand is strong. Sales of other qualities of alfalfa hay are light to moderate. In Arizona, milk output is flat. Daily temperatures are still in the 100s, but are expected to start decreasing in the coming weeks.

A few handlers increased their milk intakes this week to cover additional sales. Retail and food services demand is steady. Class III intakes decreased in some areas due to a few cheese plants being closed for repair/maintenance purposes.

In New Mexico, milk production is steady to slightly up. Most plants are running according to planned schedules. Industry contacts say that there are some difficulties with milk sales as a number of people
don't have a place to keep their milk after Hurricane Harvey. Class I demand is down. Class II intakes decreased as well. Milk intakes for cheese processing are up. Hauling capacity is tight, but handlers are
making sure customers' orders are filled on time.

Pacific Northwest milk intakes are in good balance with processing needs. Industry contacts say there is not quite as much spot milk available and the school bottling pipelines are mostly filled. Milk production is following seasonal trends as moderate temperatures build into the region.

Milk production in the mountain states of Idaho, Utah and Colorado is steady. Cooler temperatures are aiding in cow comfort and keeping the milk flowing. Milk supplies in Idaho are still long, but industry contacts suggest that Class II and III manufacturers are pulling a little heavier volumes of milk. Contacts further suggest milk intakes are in good balance in Utah and Colorado, with less milk coming in from surrounding regions.

Condensed skim in the West is moving well into ice cream. Demand from Class II and III manufacturers is steady. Western cream is actively moving into ice cream production. Contacts suggest that some cream is moving from Arizona to Texas and Mexico due to lower available cream volumes in these regions.

In a handful of western plants, butter churning has stopped and processors are hoping to not churn until Thanksgiving. Cream multiples are 1.05-1.26. According to the DMN National Retail Report-Dairy for the week of September 8-14, the national weighted average advertised price for one gallon of milk is $2.85, up $0.25 from last week, and $0.03 higher from a year ago. The weighted average regional price in the Southwest is $2.59, with no price range.