I learned something yesterday watching all the RAGBRAI riders go through town. Not everbody looks good in spandex!
I am thinking there was severe strain on the nylon threads for some of those folks! If I had had time I would have liked to have followed the heavy drinkers to see when they actually passed out. Some of those guys were well thru the beer and bloody mary's by the time it was 9 in the morning and they had 40 some mile of biking to do yet. Thats stammina (or stupidity). By 9 am it was 83 with a heat index of 97.
The heat is still taking atoll on milk production. All across the nation folks have experienced production decreases due to prolonged periods of high hummidity and heat. With these heat indices near 100 every day you know the cows are suffering. Heat detection is also becoming more difficult this is a problem that will show up 9 months from now. We may actuall go to a negative growth number in heifers within one year.
The markets still slowly are working higher with Sep milk futures (class3) being the highest since Feb. 11.
It has been very interesting to talk hedging stratagies with broklers all of them seem to bellieve a fence stratagy to be the most effective way to manage risk. An example one gave me was to buy an out of the money put and sell an out of the money call thereby reduceing cash needs and limiting margin exposure. I told him that his advice was really good for him but for me not so much.
I think we need to be looking six months out for reasonable risk mgt. costs. right now though with the market giving us a solid floor why do anything just ride it up. Our big risk now is two fold. one cheap imports.
Will NZ be able to put together the production which some have forcasted. ( many estimates put them at a level of 8-12% increase).
Secondly will our economy go into a tail spin in the fall?
I think the chances of NZ having that much of an increase will be directly related to Chinese investment into the islands milk production capacity. And as to the economy your guess is as good as mine(probably better).
Well I hope this gives you readers something to ruminate on today. What are your thoughts on the dairy markets, or spandex. (You know there are some images you just wish you could erase from your mind.) Be safe. JR
