Announcement

Collapse
No announcement yet.

3 dairy trends worth mentioning

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • 3 dairy trends worth mentioning

    The University of Missouri Ag Outlook Forum was earlier today. Here were the three takeaways related to dairy.

    1. Domestic demand is weakening from sticker shock of dairy products.
    2. Producers will likely see best margins this year, but will be constrained by low cow numbers, and slower milk production per cow.
    3. Drought-stricken California is home to one out of five dairy cows in the U.S.

    Meantime, Rabobank is reporting a price decline due to lower Chinese demand:

    http://www.agweb.com/livestock/dairy/article/dairy_prices_seen_declining_by_rabobank_as_chinese _demand_slows_NAA_Bloomberg/

  • #2
    Now really, PotterB, with the bottom of the next 4 months prices projected to be above $20, there's no need for crying! Beef cows at a $1/lb, corn near $5, Whuuppie! The cold, wet, too dry, etc., is always with us, but at $20/cwt everybody will be just fine, IMHO.

    Comment


    • #3
      Potter B thanks for trying to stimulate things and I guess you have because I am typing. If you want credible dairy info Misery is not the U to get it from. Though we need all exports China is not our main market, we need to hope Mexico keeps buying. They are our big market. As they say the best cure for high prices is high prices but I think we have till after the next Super Bowl before we cry the sky is falling.
      Larry

      Comment


      • #4
        I'm with Percy. Had to helicopter the heifers out of what would normally be their spring pasture and move them over to the concrete cowyard. Normally we would let them stay on the heifer pasture with hay till drycows and milkcows are on pasture full time. We mix breeding age heifers with drycows as follow group when grazing. My definition of "helicoptering" means pulling the loaded trailer to the road with a tractor because of deep mud. I call it that because we would use a helicopter if we had one. Now the heifers have to stay on concrete cowyard with haywagons till pastures dry up. What a job tying cows in tiestalls with heifers mixed in. I probably will find a way to keep them separate. Even with all that I'm a happy camper with these crazy high milk prices. And still to greedy to lock in prices. Was really close to pulling trigger two days ago. It went up the next two days!

        Comment


        • #5
          Read an interesting article in Dairy Business East. It was talking about the relationship between the US Dollar and the price of milk. The respective Charts were overlaid. As the dollar channel trended up, the milk price channel trended down. And the $ channel trended down, the milk price channel trended up. There were peaks and valleys in the channel itself, but the overall trends were either up or down. If the dollar breaks out higher, it will be bad news for milk prices.

          The consumer is getting walloped everytime they go to the grocery store. And they will adjust their grocery budgets accordingly. They will also buy less pizza if cheese continues higher.... or pizza makers will cut the amount of cheese on the pizzas. $24 dollar class III, while it is nice to get those checks in the short term, the pain on either end could be long lasting. A business owner once told me, it is easier to keep a customer then acquiring a new one or getting one back you lost....... how many customers will we lose?

          Comment


          • #6
            Just don't forget that just like crops and other livestock products- the price paid to dairy farmers for milk is a very small portion of the cost of ready to consume dairy products sold to consumers. Food consumers would barely notice the price increase at the retail level if when the price of raw milk went up $5 per 100 wt that was the only thing that changed when retail pricing decisions for milk or other dairy products were made.

            Over time- Most of the inflation in the price of ready to consume food of all types is not due to the price of the raw product received by the average food producer simply due to the fact that the price received by the food producer is a very small portion of retail food prices. The press will of course likely miss this as they cover the effects of "food inflation" on the poor- just as they did when corn prices in the US went up less than 10 pennies per pound yet corn for tortillas in Mexico went up as much as a $1.40 per pound.
            “Democracy is the worst form of government, -------------------------------except for all the others.”

            ― Winston S. Churchill

            Comment


            • #7
              jabber I wish they had a like button here. Your comments are so true.
              Larry

              Comment


              • #8
                I like that even with a lot of headwinds most think the downside would not be huge. I was really thinking about locking in my milk price three days ago. Gone up three days in a row since. I guess I'm just going to ride this roller coaster and see where it goes. If I had to share the milkcheck with bank I would have been locked in some time ago and at a lower price. The problem with the futures market is the guy offering to buy my milk knows more and has more analysts than I do. By the time I hear about macro conditions the smart money has already acted. In my opinion.

                Comment


                • #9
                  Don't worry PB, corn, soybean meal, the new industrial uses for soybean oil, and the production of ethanol is the only reason for higher consumer milk prices at the store. That's what the AW dairy guys told me last year, and the year before that and the year before that and the ye...well you get the message.

                  As I type beans are down .47, and corn is down .08 so the retail price of milk and all milk products for consumers should drop soon because the producers of raw milk instantly passes those savings on to the consumer. At least that's what I've been told.

                  Larry and jabber are correct, the cost of the actual raw food product is very ilttle compared to the finished food product.

                  You won't lose me as customer df, plenty of other places to cut our consumer budget other than food. If my favorite pizza maker starts putting less cheese on my pizza in lieu of higher profits it's time to find a different pizza maker df. I'll pay the extra .10 to keep the same amount of cheese on my pizza, I'm funny that way.

                  Things could be worse Ron. Way back in the late 60's we had a fast, large snow melt, coupled with rains like we are experiencing this spring which caused lot's flooding around a few of the area lakes flood plains. Grampa and a few of the neighbors hauled Archie Hummola's young stock and cows from his barn to a high spot in one of his pastures with pontoon boats. He milked like 15 cows tied to a couple trees and his A J popper and kept the calves alive on that island for almost a month. Gramps and I hauled hay out to them, he let me steer the pontoon. I thought it was fun, but then I was like 5 years old at the time. I wish knew where the pics were of "Archie's island dairy" so I could try take digital pics so I could post them.

                  Comment


                  • #10
                    I won't bother rehashing the compounding effects of sharp rises in base ingredient cost through production channels but I'll remind that price is supply and demand driven... extra demand raises prices if supply is constant... shrinking supply raises prices if demand is constant... demand for dairy inputs was higher than supply could deliver the last few years and prices went up as a result. The effects on dairy were profound. Massive culling and guys cutting back on everything left and right to make payments for feed. The last two years were downright ugly for dairy, the worst milk/feed ratio in history. It takes time to dig out of that hole. Prices are high now and production is starting to increase but dairy cattle don't come out of nowhere... they need to be grown and with the high feed prices of the last two years culling heifers was the norm. Beef price is high for the same reasons as dairy... feed prices caused culling.

                    Milk will stay "high" until the cows are added and production ticks up more. The southern hemisphere is coming into winter where they typically produce less milk... the northern hemisphere is going into spring and summer and feed will probably not be an issue this year... so it will be a year of balance sheet rebuilding for most of the usual aggressive expanding herds. Much herd expansion will take place in '15 and prices will reflect the cheaper feed from this year and the added cows next year.
                    [URL="http://www.facebook.com/DiederichFarm"]DiederichFarm[/URL]
                    "You are only as good as your next success, not your last" Sir Jock Stirrup

                    Comment


                    • #11
                      Jabber, wifey just paid $5.32 for 2 gallons of 2% at Costco. That's under $2.70/gal., and the classI price to the farmer was $25.55., or $2.15/gal. How can anybody make anything out of that margin? The small margin our Co-op earns is too small, IMHO.

                      Comment


                      • #12
                        Originally posted by PERCY View Post
                        Jabber, wifey just paid $5.32 for 2 gallons of 2% at Costco. That's under $2.70/gal., and the classI price to the farmer was $25.55., or $2.15/gal. How can anybody make anything out of that margin? The small margin our Co-op earns is too small, IMHO.
                        Weeeeeeeeeeelllllllllllllllll- you tight a$$- tell the wifey to buy her milk from the buyers that pay your coop the most for your milk or better yet buy it direct from the coop and pay your desired margin. lol.

                        I know It ain't easy bein' in the middle of the food bidness either. I just get tired of folks in the media suggesting that all price increases seem to be driven by prices received by food producers when clearly they are not. If we know what we are getting for a pound of our product vs the past we know how much inflationary impact a price increase has on a pound of product in the grocery store.

                        A lifetime price range for my corn crop of less than 10 pennies per pound does not generate a price increase of $1.40 per pound for tortilla corn in Mexico over a few months though the Washington Post thought US #2 yellow corn prices and US ethanol policies were the fundamental cause of that dramatic rise in prices. The USA Today, Reuters, World News Daily, and the Wall Street Journal all failed to use what they learned in grade school math to smell check some stories about the link between corn prices and food inflation.

                        I can't wait to see-
                        - the pizza chain suggesting in the media that they are going to have to raise the price of their pizzas a buck due to higher priced cheese.
                        - or the drive in dairy store suggestin' that they need another $.50 for the milk shake due to the dairy guys chargin' more for their milk.
                        “Democracy is the worst form of government, -------------------------------except for all the others.”

                        ― Winston S. Churchill

                        Comment


                        • #13
                          I like DFs comment.

                          Comment


                          • #14
                            Originally posted by PERCY View Post
                            Jabber, wifey just paid $5.32 for 2 gallons of 2% at Costco. That's under $2.70/gal., and the classI price to the farmer was $25.55., or $2.15/gal. How can anybody make anything out of that margin? The small margin our Co-op earns is too small, IMHO.
                            Percy what do you think they did with the butterfat they pull from that 2% milk or the 1% or the skim. I am sure they didn't threw it away. The other thing, my wife has worked in the retail side of groceries for more than 40 years, 33 for the same company. Milk is the most common loss leader they use to bring people into the stores.
                            Larry

                            Comment


                            • #15
                              I really believe we would be making more money, Co-op wise, if all our milk was going into Skim powder right now, and exported. When you bottle the majority of your fluid as Kirkland and Great Value, you're fighting a coupla penny pinchers!! I guess we're not short of milk up here, but the ocean ain't far away!!

                              Comment

                              Working...
                              X