California milk production is steady to trending slightly lower and thought to be coming off the seasonal peak in most areas. Weather conditions have been neutral.

Output is feeling the effects of the low milk prices, high feed costs, seasonal declines and fewer cows because of increased culling and the CWT program.

The overall market undertone is depressed because of severe losses at current prices. Producers are doing whatever they can to mitigate the situation, but the prolonged low price cycle is creating financial pains.

Processing plants are running well and able to keep pace with the current milk supplies. Fluid milk interest is fair at summertime levels.

Arizona milk production is trending seasonally lower. Temperatures have moderated over the past two weeks and there is limited stress on the milking herd. Fluid milk demand is fair to good as retail accounts commit to additional fluid milk promotions.

Cream markets remain on the steady to weak side with pricing levels often lower. Cream supplies are adequate for higher class products and surpluses continue to clear to butter production.

Movements into ice cream accounts are fair to good along projected levels.

Lower overall cream supplies are available because of declining milk output and lower fat levels of the incoming milk.

The Chicago Mercantile Exchange (CME) butter price closed at $1.2050 on June 17, down 2.75 cents from the prior week. Cream multiples are unchanged and range from 108-121 freight on board (FOB) and vary depending on class usage and basing points.

Prices for Western low/medium heat nonfat dry milk are holding mostly steady. The market tone is steady, although clearances to the support program still are occurring. Buying interest is light for domestic accounts and direct export sales remain slow.

Cheese buying interest is very light, a reflection of low cheese prices affecting needs. Production is trending seasonally lower, reflecting lower milk receipts.

There has been additional Dairy Export Incentive Program (DEIP) activity. Total DEIP acceptances now total 16.9 million pounds, 11.2 percent of the current year allocations. There are additional tenders that are being negotiated.  PD