By E. W.
Lang
Block cheese lost 14 cents this week to close at
$1.97 per lb. Barrels lost two cents to close at $2.00, and Butter gained two
to close at $2.11. Class III Milk Futures lost 15 cents in the nearby, but
gained eight to 18 cents per cwt. for each of the subsequent nine trading
months.
Class III Milk Futures average $18.40 for the
rest of this year, and $17.16 for 2020. Class IV Futures, meanwhile, average
$16.70 for the rest of this year and $17.40 for next. For reference, class III
is made in to cheese, and class IV milk is made in to butter and non-fat dry
milk. The prices are inverse, one to the other, nearby to the out lying months.
If you graphed the monthly prices they would be mirror images.
What does this mean to the American Dairy Farmer?
Is there a hidden market indicator? Is there a revelation of end times on the
dairy? Will there be prosperity around the corner?
I don't think so, and probably not, but I can
twist information in to anything for anyone at any time, much like someone
interpreting statistical research results, a traveling sales person selling
elixir, or an evangelist delivering The Word.
I have seldom heard a market specialist offer
counsel that doesn't include advice to buy a lot of stuff that includes a
commission. Remember always, you can zero out all risk of negative price
movement in milk or any traded commodity, but only at a price. The price of no
price risk is the cost of options and other instruments that also zero out any
possibility of ever keeping any profit over time. Options and forward
contracting can even out the ups and downs of market prices, however they
almost never end up generating additional wealth.
Agri-Mark, a dairy coop in Massachusetts is
launching a quota program for producers shipping over 2,000,000 lbs. of milk
each year. Each producer that exceeds their historical base will be assessed $5
per cwt. for whatever overage they have.
In Massachusetts it's illegal to snore with the
windows open. They also led the country in socialized medicine when Mitt was Governor,
and sent Ted to the U.S.Senate seven times. Maybe a milk quota will precipitate
producer and coop viability. Or maybe Agri-Mark will need an auctioneer in a
couple years.
The University of Wisconsin has received $7.8
million in state funding to start a dairy academy. I was on the Lancaster, WI
UW campus this weekend making pedigree announcements for a registered dairy
sale staged by the Pioneer Dairy Club. It was most rewarding to see club
members interested in breeding, marketing and milking dairy cattle. They also
awarded a scholarship named for my Ayrshire friend, Jeff Dornick, who was herd
superintendent there for some years.
Corn lost two cents this week, beans lost seven,
but wheat gained 24 cents for some reason, probably clean living in Kansas.
National corn and bean yield reports have been a little better than
anticipated. My local yield estimates correlate, this based on recent
conversations with a couple farmers at the gas station, who, in turn, had
talked to several other farmers, both at church and at the elevator.