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On Cows and Markets

By E. W. Lang

Block cheese gained 4.75 cents per lb. this week and settled at $1.86. Barrels were up 2.75 and ended the week at $1.72 per lb. Butter lost a half cent and settled at $2.31 per lb.

Range in Class III Milk future price is from a high of $17.89 this fall, down to $16.60 per cwt. next spring. For reference, July's Class III was $17.55 per cwt., and that number was the highest we've seen since December 2014. Futures for calendar 2020 currently average a short $17.00 per cwt.

A source reports that one midwestern milk coop is scrapping to get enough milk to keep their plants full. Spot milk price, reported by USDA Dairy Market News, ran from 50 cents under, to $1 over Class this past week. This range is 50 cents higher than reported a week ago, which, in turn, was 50 cents higher than the week previous. As such, there may indeed be a little scrapping, which is good news for producers.

Milk-Feed Indices remain close to $10 per cwt. for the next couple months and average $9.44 for the last quarter of this year. That's high by historical standards. Monday's USDA Crop Report will have a lot of stuff in it that may jolt the corn and soy markets and, subsequently, the milk-feed index. Or not.

Butter stocks in milk supply managed Canada are at a 48 year high. Milk/butterfat quotas - quotae, if you prefer - were established almost 50 years ago to address problems of this nature. Perhaps they are still fine tuning the National Milk Marketing Plan.

A lender in southeastern Minnesota has epistled a couple dozen milk producers and told them to either make an exit plan or find a different place to borrow money before the new year. Some will find new lenders, and some will find willing, maybe eager, buyers for their cows.

Dean Foods (DF) reported another huge loss this quarter. Sales there were down 5% from a year ago. Their earnings release stated, "Retail margins on private label fluid milk are at an all time low." I'm familiar with one gentleman who recently expressed a passing interest in aquiring the company, and it wouldn't cost much. DF ended the week at $1.07 which is down from $20 per share about two and a half years ago.

Kraft Heinz Co. (KHC) had a bad earnings report this week, too, and shares lost about 12 percent. They make a lot of foods that lower income folk regularly eat, including Mac and Cheese with whey, milkfat and milk protein concentrate. It's not my first choice of entree, but it does move a lot of product for dairy farmers.


The author identifies as a farmer near Brooklyn, Iowa

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