I know 48 likes to talk about wood, and DF, PL, and I have been using some neat udder code, BUt hows about some good ole fashioned marketing talk?
First lots of neat things afoot in DC.
Here is a good article on the end of the FMMO,s
Illinois congressman introduces bill to end federal milk pricing
Source: International Dairy Foods Association
U.S. R Joe Walsh (R-Ill.) introduced the Dairy Pricing Deregulation Act to amend the Agricultural Adjustment Act to deregulate Federal Milk Marketing Order pricing. The bill, H.R. 3372, was introduced on Nov. 4 and referred to the House Agriculture Committee.
The International Dairy Foods Association (IDFA) boards of directors voted in April to ask Congress to phase out the Federal Milk Marketing Order (FMMO) system. The board agreed that the industry should immediately move to a competitive pay price for manufactured milk but retain the existing Class I differentials until they can be phased out over a five-year period. The Walsh bill adopts the IDFA approach.
"We are very excited that Representative Walsh has introduced this legislation and will be working with him to get this bill passed by Congress," said Jerry Slominski, IDFA vice president of legislative affairs and economic policy. "If the Joint Select Committee on Deficit Reduction is serious about reducing federal spending by eliminating programs that have outlived their purpose, it should include the Walsh bill as it would save taxpayers billions of dollars.”
Personally I kinda like the idea. One class of milk I think will increase competition. I do wish that they would eliminate the fluid diff. as that would prolly lower fluid prices yet it would have the effect of stimulating consumption.
On to markets. I just don't see us as being any more than range bound for a while. This kinda sucks as there is no opportunity to get hedged out there into next summer. I think the milk fu tures really provide little benefit over the cash market. so here I sit.
Yesterdays report really didn't do much for us either. I think going forward we will see southern production level off and I do not see gains coming in the midwest. Out west I got no idea about. IT looks like the ohio valley and the north east are stuck with some bad feedstuffs for the next year so it may be hard for them to make any gains.
THe problem with the whole scenario is that in an enviroment with such callm waters on the surface there has to be some big storm brewing. I hope it isn't collapse of a large firm in the milk marklets.
Again it seems that feed costs will be the burden for many. How many of these big dairies are hangfing on becasue the banks are to scarred to foreclose?
I know your arguments that we need some kinda gov. oversight to keep milk pricing fair along with transportation diff to keep up with regional cost of production changes however that really hasn't worked so well has it? Besides I am mostly talking about the proposal to eliminate the clases of milk. I think that is the very best thing we could do to increase competition and to eliminate market manipulation. If every class was vieing for every pound of milk wouldn't that mean that all pounds would carry the same weight? Sorry for the short answer I gotta go maybe we can hash it out some more later?
St. Wendel, IN-southwestern tip of the Hoosier State
As a newbie to the industry, it took me a long time to even scratch the surface of understanding the milk class system. All I know is that we got 87 cents on her cull cows at the auction Wednesday, 96 for 1300 pound steers, and everyone who I chatted with over the weekend at Louisville is in the same boat of shipping bottom enders who are open 14 months or longer. We are already seeing a big cut back in production around the area, and if cull prices stay high, then production is going to fall off down here. Good news for you guys up North!
When we are paying $50/ton more for pretty good hay, than we are for 40% protein meal, feeding cattle has taken on a whole new dimension. When you're paying high prices for crap? Gotta sell some; just don't wait too long..save your feed for the good ones.
If you want to be a good corn marketer, you have to be a good cattle trader. And, I would assume that if you want to be a good milk marketer, you need to be a good corn trader. Corn's long term bias is down. But, that doesn't mean you're going to keep $20 milk and have cheap corn. Milk will follow corn down. This does not apply to cattle cuz there is going to be a shortage of beef cattle for at least the next two years due to the Texas Drought. If you want to keep good milk prices, quit overproducing. Reduce your cow numbers. Just look at the beef cattle market. It is obvious if you have eyes to see. If your counting on government subsidies, don't. With the budget cuts, we're going to lose Direct Payments, and you're going to lose milk supports. Count on it.
St. Wendel, IN-southwestern tip of the Hoosier State
48 you are right, but like all business men we are our own worst enemy. Would beef prices be doing this if we had not had the drought even with high-priced corn? Those animals would still be alive, but no feed, no water, no live. I don't even know if $1 cull cows will drive enough cows to the market to cut back production. In reality, the Economy of Scale theory will take precedence and only the strong and probably big will be able to survive $16 milk if supply and demand don't change enough to offset production overages.
There is a shortage of cattle as much as anything else because feed was so high that the cow-calf guys couldn't get enough for the calves (beef was low then, relatively speaking) so they sold cows thus cutting supply of beef calves and this led to a shortage of beef supply thus driving prices higher...
Getting rid of orders would be a great thing for dairy. There should be no price advantage for producing in a fluid market- cheese and butter are value added and can be stored, fluid is not and is in huge supply. The mailbox pay should be at a discount, not a premium vs milk going to processing. A pay differential due to location in the nation is ludicrous. Why bother with such an outmoded system today when I can ship anything anywhere? I can put a semi load of milk in FL tomorrow at the correct temp and it would cost less than producing it there (on average). Getting rid of the orders would increase competition for location of milk production as well as increase the pay price that those receive whose milk is going for processing. Of course I understand that those living in the south and north will be against such a system and that is one of the reasons why we never see reform.
While they are at reform they should get rid of the make allowance and price support that plants receive for production of Cheddar over other cheeses, especially since growth is in every cheese but Cheddar. This silly practice leads to a glut of cheese that the government or CWT offloads at a loss rather than just selling the high demand low supply cheeses that are sough for by purchasers.