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Veteran Advisor

from the parlor pit 10-28

There was Ice on the mud puddles this morning!  Snow flurries yesterday too.  I'll bet  a bunch of you guys are real happy that your done working outside everyday.

 

Yesterday was sideways in the nearbys and slightly lower in the outmonths.  Not really any news just a ho hum day in the market.

 

Bloomberg Had a very intersting article this morning.  I think the up moves copuld be pretty significant if the funds and outside investors run in here.  I don't know if it will happen but if it does the houswives will be rioting in the streets.

Milk futures are an “amazing buying opportunity” because they are the cheapest in 15 months relative to the price of corn, the main ingredient used in feed for dairy cows, according to Hackett Financial Advisers Inc.

The CHART OF THE DAY shows the ratio of milk to corn narrowed on Oct. 20 to 2.6, the lowest since June 2009. Corn rose 46 percent in the past three months after the U.S. government said domestic output would decline more than analysts forecast. Milk fell 1.3 percent.

Milk will advance because U.S. dairy farmers will cull herds, limiting output, rather than lose money on higher feed costs, said Shawn Hackett, president of Hackett Financial Advisers in Boynton Beach, Florida. Soybean oil rose 32 percent since he predicted a rally in the commodity June 1.

“This is a market that has been left for road kill and yet should be one of the greatest bullish price beneficiaries of the current bull market in grains,” Hackett said. “Investors will make a lot more money, with a lot less risk, owning milk at this time than owning the grain markets.”

Using the spot price, reflecting the contract closest to expiry, the ratio of milk to corn is at its smallest in 14 years, Hackett said. The 15-month calculation uses the most- active contract by open interest, or contracts outstanding.

U.S. milk production dropped 5.6 percent in the past two months after reaching 17 billion pounds (7.71 million metric tons) in May, the highest since at least 2001, Department of Agriculture data show. U.S. dairy farmers planned to cull herds to bolster milk prices, the National Milk Producers Federation said May 27. Output has been rising every month since February, based on the seasonal year-over-year comparison.

(To save a copy of the chart, click here.)

To contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

 

It could get real intersting especially if we haven't priced in the future QE by the fed yet.

 

Be safe and Go SPARTANS! JR

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4 Replies
Senior Advisor

Re: from the parlor pit 10-28

That is almost blasphemous in the land of the HAWKEYE!

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Re: from the parlor pit 10-28

Hi Jr. I just read in the farm paper an auction bill for the largest dairy operation in S.D. 2000 cow set up on 80 acres. Buying all their feed must have hurt. But hey that is what the experts said was the way to do it.

 

Jerry

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Veteran Advisor

Re: from the parlor pit 10-28

JR- Found your article interesting about the AZ dairy expansion---the$$$$of dairy hay there is a shocker---mostly abundance of labor is the driver with the head liners never getting any do-do on their boots??  Used to transport heifers down into that area in the 80's and 90's from midwest---how do those operations show any +net at year end has yet to explained to me????  

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Veteran Advisor

Re: from the parlor pit 10-28

K you also have to remeber that they have a lower building cost,  Cheaper water cause you and I will often pay that fee due to gov. assistance to them on water supply.

 

But the biggest factor is they have a very cheap sourde of water.  They are going to use that stimuli money for the hiring of day laborers at 80 dollars a shift. Makse me sick that in the time when Gov. is sending out checks to dairyfarmers for MILC pmts.  That on the other end they are giving money out to continue the surpluss thats gov. for you tho. JR

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