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Veteran Advisor

from the parlor pit10-6

Corn harvest has sure advanced around here this week.. Yields seem to be decent.  We are busy round baling corn stalks for bedding and should have that done today.  As dry as it has been the bales are really nice and will keep real well for the winter.  After that we go into full manure hauling mode should have the slurry store emptied by the end of nest week along with having pens cleaned.  Should go into winter with things pretty well buttoned up.  I would like it to rain real soon though as the dirt roads are real dusty and the alfalfa could use a drink to help with the winter nutrient store.

Yesterday was fonterras first tuesday of the month auction here are the results.

Trading Event 29 was held on Tuesday 5 October 2010

Summary of Results

Number of Qualified Bidders304
Number of Participating Bidders122
Number of Winning Bidders80
Number of bidding rounds10
Duration of trading event (hours:mins)2:13
Average winning price (USD/MT, FAS)$3,591
Change in gDT-TWI™ price from previous Event-1.3%


Price Changes from Previous Event

Changes in price indicesContract 1
Contract 2
Contract 3
All Contracts
Anhydrous Milk Fat (AMF)1.2%1.4%2.1%1.4%
Butter Milk Powder (BMP)1.4%6.5%n.a.2.8%
Skim Milk Powder (SMP)-0.3%0.6%-5.6%-0.9%
Whole Milk Powder (WMP)-2.7%-2.2%0.6%-2.1%
All products (trade-weighted)-1.5%-0.9%-1.8%-1.3%

To be honest I am not surprised to see them lower.  This week Russia started to impose strict new rules on product entering that country and it has caused several transports of product to be rejected and of course the US is behind in it's paper work so we are not approved to send product into this milk deficiet nation. (thanks USDA)   New Zelands rains that were beneficial have now become detrimental and has caused many farmers to cut back to once a day milkings as the wet weather has caused problems in just getting the milk picked up.  So I would suspect that if this continues it will cut into the supply soon. However this information is in the marklet place and it doesn't seem to worry most buyers yet.

Why?  Because we have plenty of product!  The EU is still setting on huge intervention supplies and Here even locally the cheese plant I sell my milk to is putting product into caves for storage as they have limmited markets to sell this surplus into.

Butter futures have started to fall while they are at historically all time highs they have been the one bright spot in this other wise dreary milk market.  The reason for the drop is two fold

1. Farm BF levels have started to climb with the onset of cooler weather and a new feed crop.  BF levels seem to be rebounding nicely.

2. The other factor is consumer resistance to these high prices have begun to cut back on thier purchases.  Dairy will continue to feel the brunt of the consumer price awareness that most grocery buyers are exhibiting.  With continuing news of layoffs we wil continue to walk the tight rope of supply vs. demand.


THe one are I am continually surprised at is the fact that we in the dairy industry have been continueing to add cattle.  I understand the individual farm dynamics which cause us to add cows but I keep thinking that with feed costs where they are that cattle will start to disappear at a faster rate.  What does that mean? Long term those cattle will have to be cleared from the market. Short term alot of pain is still in the cards.   here is a look at the cattle inventories.

August Milk Production up 2.8 Percent
Milk production in the 23 major States during August totaled 15.0 billion 
pounds, up 2.8 percent from August 2009. July production, unrevised at 15.3 
billion pounds, was up 3.0 percent from July 2009.

Production per cow in the 23 major States averaged 1,796 pounds for August, 
51 pounds above August 2009.	

The number of milk cows on farms in the 23 major States was 8.36 million 
head, 10,000 head less than August 2009, and 8,000 head less than July 2010.

Milk Cows and Production by Quarter - United States: 2009-2010
[May not add due to rounding]
                 :    Milk cows 1/     :   Milk per cow 2/   :      Milk production 2/       
     Quarter     :          :          :          :          :          :          : Change  
                 :   2009   :   2010   :   2009   :   2010   :   2009   :   2010   :  from   
                 :          :          :          :          :          :          :  2009   
                 :  -- 1,000 head --      ---- pounds ----       million pounds      percent 
January-March ...:  9,295      9,091       5,097     5,209      47,374     47,352            
April-June ......:  9,262      9,112       5,278     5,460      48,888     49,747      1.8   
July-September ..:  9,155                  5,111                46,793                       
October-December :  9,090                  5,090                46,265                       
Annual ..........:  9,201                 20,576               189,320                       
1/  Includes dry cows; excludes heifers not yet fresh.                                       


 Well Be safe out there today the sun is full up now and the cattle have been milked and fed so I think I better get on to the rest of the work today. Be safe and thanks for reading JR

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