The March 2010 Class 1 prices in California range from $16.44 in the north to $16.71 in the south. The statewide average Class 1 price based on production is $16.47. The average is 2 cents lower than February 2010 but $5.32 more than March 2009.

California milk output is steady to lower and some areas were showing declines on a week-to-week basis. The impact of wet weather conditions over the last few weeks has been a factor, as well as feeding decisions and time in lactation. Rain continued over much of the state.

The milk intake declines have been reported in the 1 to 3 percent range. Processing plants are handling the milk supplies in orderly ways. Finished product prices and other market conditions are not impacting the manufacturing mix to any real extent. Fluid milk orders are steady with recent weeks.

Rainfall and wet field conditions are also impacting the start of alfalfa hay in southern California.

Arizona milk production is increasing at a steady rate and narrowing the output gap from year-ago levels. Fat and protein levels are also building. The increases are welcomed into available processing plant space. Bottled milk interest is steady to occasionally higher. Demand is consistent from school accounts, while retail movements are often improved when featured.

Cream markets are mostly weak and characterized by heavy offerings and moderate demand. Ice cream demand is seasonally slow and output is often steady at light levels.

After bouncing around over the past week, the CME butter price closed at $1.3500 on February 10, up a half cent from the previous Wednesday. Cream multiples are steady at the 110 to 120 range freight on board and vary depending on class usage and basing points.

Butter plants continue to operate on busy schedules to take advantage of ample supplies of cream. Milk intakes are near year-ago levels and yields of solids are at high levels. Churns continue to produce more butter than needed for immediate sales.

Excess inventory is being put into storage where available. Some extra butter is being offered on the spot market and to the CME Group. Buyers are increasing retail orders for grocery accounts as the Easter holiday approaches. Sales of inventory are reported good at current price levels.  PD