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Veteran Advisor

from the parlor pit 1-18

For some reason I am in one of my moods this morning. Maybe it's because I got some good news yesterday on some other issues I am dealing with or maybe it is because I just feel like stirring things up a bit. or maybe it's because It's cold outside and I need abunch of guys to respond to me so I can have an excuse to stay inside!

 

BUt anywho we have the potential; for a very good week ahead with Brazil's rains not hurting Soy fields they are hurting cities and rural areas very hard.  Last week the Brazilian Gov. requested 66 million pounds of NFDM to rush to flooded ares to support the nutrition needs of folks hardest hit.   I think with the overnight trade showing Green numbers we have the upside wide open.  Now some have said to me that even with these higher prices that costs are rising to fast to stay profitable right now.

 

Jeff Caldwell tagged me on Face book yesterday.  It gets me to thinking about the publics view of us. I think that they really like the idea of cattle eating and milking and I think that the facilities ,as long as they are clean and the cattle are well cared for, don't matter as much to them.  Every body thinks we have to have pictures of cattle on green pasture with some small child and a dog walking thru them. It is a scene which is very rarely lived out in real life.  But I think in the current economic crisis that our greatest threat may be our percieved goverment assistance. Here are some comment from and article that I found. Amusing for sure.

 

"This is exacerbated by a smaller than expected
U.S. corn crop and the likely growth in ethanol, an alternative fuel made mainly from corn"

Use Ethanol in your morning Late' - you Prius driving, communists!

Oh and thats "Subsidized" as well.


  • What ever happened to the free market? Why do dairies get to be subsidized? Cut all the subsidies and let them fend for themselves! If they were to grow healthy fruits and vegetables instead of peddling disease-causing dairy products, that would be wonderful.
  • go back to bay area please
  •  

    So the first comment in the proper time line was how we are disease peddlers? HHHMMM what would you say to that?  The other respondents didn't do a very good job.

     

    And it isn't just consumers complaining about subsidized products here is another dairy group ripping into ethol

    Corn Con: Mother of All Battles-for-Acres coming up

    Corn, soybeans, wheat, cotton are all just now starting the battle for acres of land on which to grow.  Each of these crops is at - or near - record high prices and the outlook for each gets even better as each crop increases its prices even more to “buy acres”.  Predictions are that speculators (spec money, as it called in the trade) will be pouring ever more money into commodities.  March corn ended this week just under $6.50 per bushel which converts into $275 to $290 per ton.  There was much sincere talk on the Market to Market farm show this morning that corn will not be able to ‘buy acres’ until it hits well above $7.00/bu and that $8.00 is easily possible. At those prices, corn does not work as a cattle feed and the ethanol plants cannot be profitable unless there are large sustained price increases for milk, meat and oil.  Is this turn of events going to be strong enough to get the attention of the political ethanol supporters that their beloved program of subsidies, tariff protection and mandates is the base cause?   It is not likely to impress them but there are plenty of signs that we-the-people are getting weary of the ruse.  Unfortunately, there is still more economic pain for our industry to bear before common sense returns.  

    The blender’s wall has been hit.  That means every drop of ethanol that is required to meet the 10% RFS is being manufactured and sold but there is more capacity available. The mandated production levels are now higher than the market can absorb.  Only growth in overall gasoline consumption will allow more ethanol to be sold – except for the insanity of exports of subsidized ethanol mixed with gasoline made from imported oil. My goodness, the ethanol industry must hate fuel efficient cars, electric cars, and small cars.  Maybe they can mandate that eveyone drives only their biggest car and take the long route to work!  In my case that would be my big diesel pickup.  

     

    In the end how do you defend subsidies without pitting commodity against commodity?  Even today I hear from beef producers who are mad about the whole herd buy out of 85. 

     

    Finally the out west boys are getting hammered in whole new ways. First banking is getting very nervous about balance sheets.  They are starting to force liquidation of heifer herds to make up for cash flow. I heard of one producer who sold a group of 2nd period bred heifers for beef for .70 / lb. Folks that makes me sick. They are also looking forward to the coming hay shortage of next year. One producer stated that in order to lock up his supply from Nebraska they asked for 90% down! other wise the hay was going to be torn up and corn planted! 

    Be safe. JR

     


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    Veteran Contributor

    Re: from the parlor pit 1-18

    Hey JR,  I have a question for you.  Why don't dairy farmers produce their own feed?  If you produce your own feed the price of corn and soybeans should hardly concern you. 

     

    The local big time dairy has purchased and rented more land then any other farm around. 

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    Veteran Advisor

    Re: from the parlor pit 1-18

    THe answer to that lies in the helping hand of the goverment. Foy years they kept corn cheap so it was cheaper to buy it than to grow it. From the beginning of time till the mid 70's Dairy farmers grew nearly all of thier feed. They limited cattle numbers to the size the land could care for.  With the huge goverment intervention into the grain market that occured from 73 on it became cheaper to buy your feed than to grow. I Remeber in one of my Dairy Management classes at MSU  a Professor Dr. Mullenberger used to say  "you milk cows let some other dumb **bleep** grow the feed."  It became known as the California model. Now with the turn of commodities the dairy sector has gotten caught in the turn.

    So now you will see these large Dairies start to be aggressive in the land takeover. I personally think it is the last ditch effort carried out by supplier financing and loose financial mgt. (google Verba Hoff dairy)  If you owe your neighbor for feed and now you are agressivly bidding against him I would think that your name would be the same as that nutrient you are covering your fields with.  ALso think about this if you are milking 1000 cows in most states you would need a minnimum of 3,000 acres to supply your feed needs.  I know in some places this wpould be less but I thinkyou would want abuffer also.  In a drought year or a cool wet one like last year you may need more.

    Now take on a dairy like is being proposed to be built in Wisconsin by terry tulls. He may well need in excess of 20,000 acres just to meet his feed needs!  I am thinking that the row crop guys would get a little nervous about that.  Also consider that they are not trying to grow it for the least cost but trying to keep from having to pay the high. so if they have a cost per bushel of 5 dollars they are still ahead of buying it at $6.  This isn't going to be just dairy that pushes the pencil this way. What if Christianson farms goes out and contracts with growers to supply all thier corn needs for a fixed profit per acre for a number of years?  They have the benefit of a proceesor/packer so they can push thier extra cost thru to the consumer much easier than any other less integrated individual and they have a steady input price! I think high priced corn causes a market realignment like no other time.

     

    Many small dairies are very concerned what the next 18 months will do to our industry.  And remeber in the end it was the goverments fault!

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    Veteran Advisor

    Re: from the parlor pit 1-18

    JR  --Tulls operation will be quite a surprise for the cheese country folks--is it "live and learn" or" pay and learn"--good luck only so much $$$$ to go around and an operation like his is so great why would Nebraska let him get away to Wisc. ? 

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