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Veteran Advisor

From the parlor pit 5-26

I was thinking this morning about a sound mkt. program that would make us all some money in this dairy cycle.  I happened to be out running haylage out of the harvestore while I was thinking about this.  My dad walked into the feed room and we chatted for a minute about the day then he pointed to a pile of haylage by the harvestore and said "We need to keep that feed cleaned up in here" and walked away. Dad always says it's the 2% percent rule. 

That little episode reminded me of another story from the FBI when Hoover was in charge.

Hoover liked his briefs from the station chiefs to fit on one page with standard margin size strictly adhered to. One day a station chief had an especially long brief to file and to keep the brief on one page he crowded over the margin lines. Hoover read the brief and scribbled at the top of the page " WATCH THE MARGINS" .

Those two stories got me to thinking about how we go about our marketing.

What is your cost of production?

Can you lock in a profit with today's trading tools?

IF you don't know the answer to the first you can't answer the second.

Feed costs have been particularly hard to handle for the past few years.Last year we locked in some things for our protein mix and corn purchases this year we have not. Not that we think corn and beans are going significantly lower we just don't think the cost of locking up some of these feed stuffs will significantly benefit us. And on most dairy farms cash is still the rarest of commodities so you best be sure to keep as much of it free as you can. I think there may well be a time this summer to Lock in feed stuffs for future use as we will probably see higher grains in the fall. I am not ready to do that yet. 

So guys before you get all worked up about the price of milk falling out bed yesterday determine first what does it cost me today to produce 100 lbs. Of milk.  If you can't wrap your hands around that info start with what does it cost to feed your cows today.  And don't do something real complicated and get worked up about allocating each expense in each column just right.  Get a rough view that should start you on a path to when can I lock in a profit?

Oh yea about yesterdays price drop remember everything tanked yesterday Milk will never be the leader of the commodity pack it will always be the follower.  Also remember yesterday was mostly about fear. Fear we would have to much milk going forward.

HELLO Butter stocks were down 14% from a year ago shouldn't we be fearful of not enough butter? Well that is all from the parlor pit via the feed room this morning. When your looking at the price of milk or for that matter any commodity price chart the only chart that goes straight up is one drawn up by a global warming hoaxer!Smiley Very Happy Remember following me is very risky! JR