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jrsiajdranch
Veteran Advisor

From the parlor pit 8 25

Well is this the crash?  The milk markets are in a tail spin Hopefully they can get pulled out very soon. but near term this is gonna be scarry. This is bullish longterm. but short term this is really gonna squeeze guys. 

 

Here is Allen levitts commentary from yesterdays close.

 

Cheese falls to 3-month low
Cheese prices continued to tumble, though buyers came in with bids to support
the market in the low $1.70s for blocks and a few cents lower for barrels. Butter
held at $2.0925 on no activity. Current spot prices equate to a Class III price of
about $17.50 and a Class IV price of about $20.30.
SEP milk futures continued to decline. The contract has dropped more than $2
since the first of the month. Block cheddar has dropped 42.25¢ since Aug. 1 and
barrels have fallen 43.75¢. August cheese price declines of this magnitude are
unprecedented. This is shaping up to be just the second time in the last 19 years
that the NASS cheese price average and the Class III price will be lower in
September than in August. The previous time was 2008, when the cheese market
crashed in late July (see chart).
Class IV futures were lower today in the front months, with SEP-NOV shedding
22¢. SEP settled at $19.35 and OCT at $18.45 – well below where spot prices are today.
Whey and NDM futures for fourth quarter also remain discounted to where prices currently register

 

With current feed prices this puts us at about a margin of 6 dollars. after feed costs.  When I started farming in 92 I aimed to keep feed costs at 4 dollars a hundred now many are saying that feed costs are approaching 10-11/ hundred!  So in 92 my margin after feed costs was 8 dollars.  Today it is about the same.  So really no price hike to get ahead just still treading water for most. The older more established dairy farms or high equity farms are doing very well. Us mid career guys/ highly leveraged farms are getting our clocks cleaned.  

 

We had strong winds come thru here on tuesday morning. We lost some corn we also got 1.5 inches of rain. The rain sure perked things up One fella a county away lost part of his freestall barn.  I have had several folks call about chopping down corn as they are gonna have a hard time picking up the corn with the pulltype choppers. 

I'll try to post a couple pics later today if I have time. 

 

Be Safe.

 


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4 Replies
too close for comfort
Senior Contributor

Re: From the parlor pit 8 25

Hi Jr: I didn't see an explaination for the drop. The dairy trading is so small that the few bigs that trade it can pretty much do as they please with it. I feel for you. I was in you shoes 20 years ago and it's a crazy market. There is no holding till the market comes back.

 

Good luck, Jerry

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jrsiajdranch
Veteran Advisor

Re: From the parlor pit 8 25

Sorry Jerry The explanatin is that we have huge stocks of American cheese. July's numbers were higher than year ago. But last july's were lower than 08 so go figure we aren't talking about burdensome stocks here.  Every big in the dairy food chain is scarred to death we will have another 08 financial crisis which leaves them h olding the bag.  That is a recipe for disaster in my opnion. We haven't got the milk and we don't have the butter for sure. This thing is gonna go higher. Problem is that between now and then you gotta eat. And I am gettin tired of short rations!

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jrsiajdranch
Veteran Advisor

Re: From the parlor pit 8 25

Class 3 milk for sept. and oct. up the daily limit of 75 cents!  Maybe the throat clearing is done and we can move higher. I think this last move was mostly because Kraft is Broke!

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too close for comfort
Senior Contributor

Re: From the parlor pit 8 25

Jr. I certainly hope that you and a lot of my friends and neighbors can weather this till your big pay day comes. I've been waiting my whole life for these last few years. But I know it is coming at the expense of others. The sad part is after next year we could see some of the worst times we have ever seen as cash croppers. I think back too the $8 hog days in the 90s. How far below the cost of production was that? Right now $3 corn would probably be as bad as the $1.60 corn I sold the year I sold my cows.

 

Have a safe harvest, you're way too important to your family no matter what happens to the price of milk.

 

Jerry

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