The December 2008 Class 1 prices in California range from $16.57 in the north to $16.84 in the south. The statewide average Class 1 price based on production is $16.59. The average is $2.16 lower than November 2008 and $6.42 lower than December 2007.

California milk output is mostly steady to occasionally trending higher. Weather is not limiting growth. The main factors are rations, feedstuffs, hay usage, supplement usage, base plans, financial considerations, etc. Generally, it is not one factor, but a combination of several that is keeping milk flat. Plants are running along expected levels and with low nonfat dry milk (NDM) prices, there is often appreciation that the milk situation is not heavier. There are ample milk and components to meet current needs. Fluid milk orders are generally flat.

Arizona milk production is trending higher from the seasonal low point of the year. Weather conditions are nearly ideal for this time of year with cows comfortable. The declines in dairy feed rations are welcome, especially as milk prices decline. Total costs of production are declining. Less milk is entering the state to help out other regions as those supplies are better balanced. The indications are that plants have room to handle more milk if offered. Bottlers are pulling more milk as there are numerous features in high population centers seeking to gain shoppers’ attention. Gallons are often priced below $2 per gallon in ads.

New Mexico milk supplies are steady to higher at levels a few percentage points ahead of last year. Milk is backing up some as milk shipments toward the southeast states have slowed. Plants in the state are able to handle the current offerings, but are being taxed as milk supplies build. Retail bottled milk orders are steady.

Cream markets are unsettled. There are often additional loads of cream being offered than had been expected and clearances are sometimes slower to butter producers. Pricing cream to move out of California is more expensive because of the two-month class pricing system and butter prices declining. Higher class item production is seasonally active along projected levels. Reductions in food service orders are apparent for many cream-based items. Multiples range from 110-124 and vary depending on class usage and basing points.  PD