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Veteran Advisor

from the parlor pit 11-12

It's raining!  But the rain seems to be able to build up on the windshield of my pickup so it must be frozen just a little.  It is indeed time for a little water.

Since Chima is all the mkt. news is about right now I thought I would throw up a little news story about China's milk demand.  The Kiwis know it well that is why CHina has replaced America as NZ's greates export mkt. Chinas demand is hard to fathom it almost seems endless.

 


Dairy prices to hold firm as Chinese imports surge

Dairy prices are to hold their ground until at least the end of the year, supported by strong Chinese imports, which may have been significantly stronger than thought.

The unexpected traction in prices, which prompted dairy giant Fonterra last week to maintain milk payout forecasts despite currency headwinds, "may yet continue" after China roared back into the imports markets following a typical summer lull.

"Chinese dairy imports appear to have jumped again in October," Rabobank said.

With Russia also "actively covering its needs" for imports, which have been lifted by the damage caused by drought to domestic output, the world's top buyers were "still up and about", the bank added.

'Mass slaughter'

The comments came as US officials in Beijing highlighted that Chinese consumers were still prizing imported milk in the face of continued findings of the toxic chemical melamine in domestic production.

Melamine, when added to milk, lifts the protein reading so supporting higher payments to farmers, but caused a number of deaths among babies two years ago, at the height of a Chinese contamination scandal.

"Continued detections [of melamine] have lowered processor confidence, with some manufacturers shifting entire product lines to imported ingredients," the US Department of Agriculture's Beijing bureau said in a report.

The market fears were "dampening" expansion efforts by local farmers, who also faced outbreaks of foot and mouth disease which had, by the end of August, been reported in nine provinces.

The bureau said it had received unconfirmed reports that efforts to clean up the disease had prompted "mass slaughter [of animals] in several provinces, and in come cases involving use of Chinese military to ensure herd elimination".

Soaring imports 

The clamour for foreign dairy production is set to take imports of Chinese skimmed milk powder to 146,000 tonnes this year, 21,000 tonnes more than the official USDA estimate, the bureau said.

For whole milk powder imports would reach 140,000 tonnes this year, more than double the current USDA forecast.

And purchases of foreign whole milk powder, which nearly all come from Australia and New Zealand, would rise by a further 80,000 tonnes in 2011 as processors continue to rely on imported product.

"Chinese dairy product demand will continue to grow faster than local production, requiring additional whole milk powder imports through 2011," the report said.

"China's growing reliance on imports will continue for the foreseeable future."

 

And here in the US some of our major players in the US food mkt. are under pressure here's a link on Kraft.

More than 150 companies with market caps above $500 million that claim they have free cash flow—really don't!

 That's the word from Ken Hackel, who wrote the just-published tome (and I do mean tome): "Security Valuation and Risk Analysis – Assessing Value in Investment Decision Making."

 You should care, because free cash flow is the lifeblood of any company looking to grow.

 And free cash flow was touted as a plus quite a bit in the recent round of earnings.

 Hackel isn’t impressed. "The term 'free cash flow' has almost gotten to be like the old television show 'What's My Line',” he says. “What free cash flow should be defined as is the maximum amount of cash an entity could distribute to its shareholders without impairing its growth rate. Unfortunately, we've gotten quite a bit away from that."

 The free cash flow definition most people use is operating cash flow minus capital spending.

 But Hackel says that true free cash flow requires a lot more in the way of adjustments—the kind he believes most analysts simply do not do.

 Among companies whose cash flow he believes are flashing red:

 Kraft [KFT  30.46  ---  UNCH  (0)    ], whose revenues missed estimates and which didn’t include a cash flow statement with its earnings release or discuss it on its earnings call. Still, using available information, Hackel believes he was able to analyze the cash flow and say, “Their backs are really against the wall; they have no room for expansion; they do not have financial flexibility."

Kraft disagrees, saying that over the past few years it has made excellent progress improving free cash flow. "In 2010, there are a number of puts and takes in the equation, due to the acquisition of Cadbury. However, on a more normal run-rate basis, we would expect cash flow to be north of about $3.5 billion.”

 

I feel I have found a kindred spirit in Kraft that line " Thier backs are against the wall they have no room for expansion they do not have finiancial flexibility"  thats the way I have felt for almost 2 and a half years now. So I say welcome to the club!  Oh yea deans is in trouble to.

Well Be safe and stay dry,  We had a first calf heifer calf last night nice little bull calf doing great and Mom is milking wonderfully.  That is what is so nice about dairy farming seeing your hard work rewarded by some small calf who just is sure that the world is a better place because he is in it! Dairy farmin is great! JR

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Re: from the parlor pit 11-12

It's good to be a lifestock man and see all the emergence of new life.  The day my father died was a very sad day for me as the family gathered together just to be together. After a day of sadness, I returned home late in the evening.

 

I visited my farrowing house as was the habit during those days. Without turning on the lights within the building, I quietly walked through the farrowing house which was illuminated only by the strategically placed heat lamps. My hired help had done well as it had been a very productive day in that building. It was teaming with new life as several sows had chosen that day to farrow. Amazing how that lifted my spirit on such a sad day. I went to the house and slept well that night.  Life begins and ends and it is all a cycle. That new calf probably didn't lift your spirits like happened to me that winter night in February of 1980. It did have a positive effect on me and I have never forgotten it.

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