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Of Cows and Markets
By E. W. Lang
Block cheese lost six cents this week to close at $1.78 while barrels lost four and ended at $1.74 per lb. Butter gained one at $2.41. Likewise, Class III Milk Futures for the next 11 months lost three to 33 cents per cwt., and run from $17.35 here in July to $17.70 in September and October. That's 30 cents off of a week ago in those two months. 
Meanwhile, corn gained 19 cents per bushel this week, and beans gained 28 cents. As such, milk-feed indices suffered a 45 cent decline to $8.85 per cwt. on the last half of this year. Last week's $9.30 margin was very profitable, compared to the 10 year average of $7.73 on that index. The first half of year next averages $7.89 per cwt., so that's pretty average.
Speaking of average, USDA has started delivering Dairy Margin Coverage. 10,000 operations are sighed up. January through May payments should amount to $100,000,000, That comes to 11 cents per cwt. of all milk produced in the United States during those months. 
Lenders are pressing milk producers to pay down principle rather than borrow for expansion. However, dairy cow prices are holding, even in hot weather. Four pots of fresh cows, three Jersey and one Holstein each fetched $1650 on today's Turlock Video Sale. 
I saw a couple pots of Jersey cross open heifers weighing 480 bring one dollar one and one dollar two bits, so add a year at $2 per day and you have $1255 springers. That's probably a decent enterprise for those who can do it cheap and well, and probably a better enterprise for those who can calve and sell. 
Butter price in Europe is currently at a three year low. Cheddar over there is trading at ten to 15 cents under our current price. Hot weather is biting in to their production, as it is here. 
Canadian skim milk powder stocks are creeping up. Back down here, USDA has changed its milk price forecasts for this year and next. No one cares, nor is anyone interested. 
The NASDAQ, S & P 500 and Dow Industrials all ended the week at record high levels. Interest rates ticked up from a week ago, but remain low by historical standards, currently 1000 basis  lower than the first year I farmed. 
That same year, milk was $13 per cwt., corn was $2 and hay was $65. Yet herd dispersals were billed in every weekly shopper, and some dairy auctioneers were pitching two and three tents per week. 
Few years and few months in history have seen milk production as an easy gig, either physically or economically. Every month in every year, however, Americans can buy milk at a stable price in any corner of the country on any day. They can because enough farmers are willing and able to produce milk for a living, tough gig that it is, and always has been.
Reader Comments
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Old Timer
July, 14 2019
Great stuff-keep it coming!!