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Veteran Advisor

From the parlor pit 12-16

It is raining here this morning which when the temp is 18 is a bad thing.  Milk truck got in OK so that is one less thing to worry about.  During last weekends blizzard our CO-OP lost one truck to a roll over.  I have a lot of respect for those guys who drive those trucks.  Inside those tanks they can't have baffles so when they are a third to half loaded they can have a real fun time with the sloshing around of that load. 

 

Today we will focus on the KIWI's. Here is an article that I had been sitting on since last week.

Drought-hit Kiwi milk farmers face vital fortnight

"Significant" rain is needed in New Zealand within the next fortnight to protect the last remnant of milk production growth in the world's top diary exporting country this season, Rabobank has warned.

The caution came Fonterra, the New Zealand milk co-operative, lifted its hopes for payouts to its member farmers, flagging a "continuation of high international dairy prices".

Growth in New Zealand's milk output, which began 2010-11 at 5%, had slipped back to 2% for the season up to the end of November, hampered by a cold spring, Rabobank said.

However, dry weather, which prompted the country on Wednesday to declare part of North Island a drought zone, "has seen current milk flows now falling behind in most regions", with Canterbury, where land is irrigated, a notable exception.

"Significant rain is now required prior to Christmas to avoid a sharp and early tailing off of milk flows," the bank said.

'Solid demand' 

New Zealand's drought contrasts with the heavy rains which are proving a mixed blessing to Australia's eastern dairy farms.  While cutting Australia's milk output by 1.9% in September, the spate of quality downgrades to milling wheat crops caused by the rainfall will prompt a "surge" in supplies of feed grain.

And the drought was acknowledged by Fonterra in a market update in which it lifted by NZ$0.30 to NZ$6.90 per kilogramme of milk solids its estimate of its payout to members in 2010-11.

"Milk production in the North Island is declining and we know farmers in some regions are struggling," Sir Henry van der Heyden, the Fonterra chairman, said.

 

This article along with the rise in the price of Palm Kernel (which they use like we would use like corn) have made the price of milk to Fonterras producers rise.

 

Yesterday of course was the fonterra auction and guess what?  World prices are up!

 

Changes in price indicesContract 1
(Feb11)
Contract 2
(Mar11-May11)
Contract 3
(Jun11-Aug11)
All Contracts
Anhydrous Milk Fat (AMF)0.1%1.1%1.7%0.7%
Butter Milk Powder (BMP)-4.7%4.9%n.a.-0.7%
Skim Milk Powder (SMP)3.1%1.6%2.4%2.5%
Whole Milk Powder (WMP)3.2%1.9%2.1%2.6%
All products (trade-weighted)2.9%1.7%2.2%2.4%

 

 

 

 

 

 

 

 

 

Another intersting thing is the price of cheddar cheese.  On the CME yesterday 45 loads of cheese were traded on the board.  Now trade of cheese on the CME is a pretty interesting thing first off no one is required to trade chees there.  If a plant in Pennsylvania needs a load of cheese.  They can buy it from someone in California by just picking up the phone and calling a broker or the cheese plant directly.  The two manufactureers can determine the price on their own irregardless of the CME. However if the manufacturer can't find a buyer than they can put the load on the CME exchange for sale. they have to pay a fee to the CME plus brokerage fees. so in fact the cheese can end up being more expensive thru this proccess.  Also this one load of cheese can then change the price of class 3 milkl even tho millions of pounds of cheese may have been traded off exchange all day this one load of excess will price the nations cheese price for that day. Wierd is one word for it. So yesterday when 45 loads changed hands my bovine senses started to tingle .  A little investigation finds that maybe there is some out of order selling going on just to manipulate the price.  I don't know for sure but it just doesn't seem right.

 

Even with those 45 loads of cheese which were initially loffered at 1.30 were eventually sold at 1.32and some change.  Now that is another thing that peeked my interst.  Why if you are a buyer would you wait till the price went up to buy?  You could have bought the cheese for 2 cents less on the initial offering.  That would be like a bunch of guys at a farm auction watching a 4020 sell for 10,000 but waiting for the auctioneer to take the bid UP to 12,000 before bidding.  Very strange. Wonder if Machinery Pete has seen that before?

 

New Zealand Cheddar is roughly 1.90 a pound here we are at 1.33.  And we have a cheap dollar to boot. you would think that the world would be beating down our door for the cheaper dairy stuff!

 

Well today I am going to keep at the cattle care and hope for better weather and higher prices. BE Safe.JR

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9 Replies
Senior Advisor

Re: From the parlor pit 12-16

What makes that $1.33 lb of cheddar worth $4 plus in Sam's club? Perhaps Sam does want to share with you. BTW I bought 4 lbs of Tillamook Chedder a couple of days ago. I'm trying my best to help you dairy man.

 

And I've been trying to buy leather furniture and did you know the best hides come from yee olde bossy?

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Veteran Advisor

Re: From the parlor pit 12-16

Ethol subsidy! LOL no ROFLMAO  Actually it's the fact that the waltons need more money in the trust fund. If you really want to get sick that 1.33 cheddar block has about 95 cents of milk in it!

 

Well at least ole Sam can pay his help more because of the mark up on my cheese (tongue firmly planted in cheek there).

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Veteran Advisor

Re: From the parlor pit 12-16

jr-  was reading that "Anhydrous. milk fat "is available from China --- I can't  understand a country with supposedly starving population would export any kind of food ingredient to a country---USA"" that is supposedly  going to feed the world --what don't I get ? ?  

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Veteran Advisor

Re: From the parlor pit 12-16

K this is pure speculation on my part here but  it has to do with diets.   The chinese like the Japanese tend to have a higher protien diet with a lower fat diet. India is much different with a higher fat diet.  So China while short on milk in total has this by product of AMF which they can export. Now it won't amount to much of anything and definatly isn't a price surpressor to our market not to mention that the quality issues make it Public relation nightmare if used, remember Melamine?

The bigger issue to me is that they can export to us be we can't export to them. Again thanks USDA!

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Senior Contributor

Re: From the parlor pit 12-16

Hey JR,  what happened to that old gov't cheese give away program? You know the one where several lb blocks of gov owned cheddar and swiss were given away to the needy families.

I thought it was a great program, served the purpose of getting rid of old cheese inventory from gov storage, and a cheap sandwich mix for the folks. Hopefully the gov inventory was replenished with new fresh product helping raise the cheese wholesale prices, but I have read nothing lately on what happened. You got anything?

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Veteran Advisor

Re: From the parlor pit 12-16

If they can dilute it into our diet ---not into their own---really hope the food distributors in USA think this guy --with all of their hocus-pocus food label gimmicks---will not even think of buying coffee creamer or dream whips etc.----we by local cream-milk etc.

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Veteran Advisor

Re: From the parlor pit 12-16

4  the program is only initiated when the price of cheese gets down to where CCC purchases are warranted.  Which requires cheese getting down below suport levels.  Those support levels are low enough now (just like in corn) that if we get that low there wouldn't be any milk to make cheese.  So the program is kinda obsolete. 

I think they should do more of that.  The give aways I mean.

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Veteran Advisor

Re: From the parlor pit 12-16

K as far as I know  no one in the US has bought this stuff.  But I am not putting it past anybody. 

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Veteran Advisor

Re: From the parlor pit 12-16

I grow very suspicious when someone doesn't have the integrity to label their product ----"grown in USA"-----read the label on the coffee creamer---if that hideous buffet of language doesn't confuse you nothing will--"-fool me once" ! ! !   

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