Component levels are holding steady. Less milk is being offered at discount to Class prices. In the Northwest, weather conditions are favorable, pasture growth is occurring, and milk production is building slowly. Milk volumes in Utah and Idaho are steady to increasing. California milk production is trending higher on a week-to-week basis. Arizona milk output is teetering at the seasonal peak and being aided by good milk producing weather conditions.

CHEESE HIGHLIGHTS: Cheese production levels across the country were mixed this week. Production in the Midwest remains strong as larger milk supplies and good component levels add to inventories. Production in the Northeast slowed some as Class I usage took more of the milk supply. In the West, production was mostly steady with some mixed interest as to manufacturing volumes.

According to the NASS Dairy Products report, total U.S. cheese output for February was 857.4 million pounds, slightly below year ago levels (unadjusted for the 2012 leap year) and 8.4% lower than January of 2013. Retail demand at current price levels is good with some increased featuring in weekly ads. Prices from the National Dairy Retail Report were mostly lower from two weeks ago with increased ad numbers. Export demand is helping to clear additional supplies and keep inventories manageable.

ORGANIC DAIRY MARKET NEWS (DMN): AMS reports Total Organic Milk Products sales for January 2013, 189 million pounds, were down 1.8% from January 2012. Organic Whole Milk sales for January 2013, 51 million pounds, were up 7.2% compared with January 2012. The national weighted average advertised price of organic milk half gallons, $3.59, is 6 cents lower than two weeks ago. The price range is $2.79 to $3.99. One year ago the price was $3.08. The region with the highest average price is the Southeast, with $3.91, while the South Central has the lowest, $3.13. This is the first period of 2013 that the Northeast, at $3.33, has not had the highest average price.

This reporting period, the average advertised cost of a half-gallon of organic milk is $1.55 more than the cost of a conventional half gallon. The current national organic half-gallon milk weighted average advertised price of $3.59, compared with conventional half gallons, $2.04, yields this price spread, which is down 75 cents from two weeks ago. A significant percentage of organic butter ads were priced $3.99, which equals the advertised price of some conventional butter. The national weighted average advertised price of organic butter is $4.15, up from $4.07 two weeks ago.