By  E. W. Lang

This Week

Block Cheddar lost three cents this week, to close at $1.83 per lb.  Barrels were down 6.5 cents to $1.60.  Butter, up three to $2.03. NFDM was down two to $1.23.  Dry Whey was steady for the week at 31.5 cents per lb.  For reference, Whey was 47 cents in January, while Class III Milk was under $14 per cwt. 

December Class III Milk is down six at $19.30 per cwt.  Calendar 2020 Class III Futures run from $17.12 in January to $17.68 in September.  2020 Class IV runs from $17 in the nearby to $18.25 in September.

The Dow Industrials and S & P 500 closed at record levels today.  The NASDAQ closed close.

Next Month, Next Year

Prime Minister Winston Churchill was one of the most significant world leaders of the last century.  He, nearly alone, rallied the United Kingdom to resist Nazi aggression, and persuaded the British to persevere, just as bombs fell on London.   Though not a purebred Englishman, Churchill was in the drink at 10 every morning, smoked profusely, and enjoyed bricklaying for recreation.  

Churchill once commented that politicians have to be able to predict what will happen tomorrow, next week, next month and next year.  Then they have to be able to explain afterwards why it didn't happen.  So is the case with commodity market forecasting, and predicting economic trends within an industry.

I have assembled some 2020 dairy industry prophesy based on documented historic trends, accepted economic theory, my own contemplative thought, and some other stuff I happen on to as I write. 

In the year ahead, every person in the United States will, every day, have access to an abundant supply of varied food stuffs at a stable price.  Contributing to this will remain a dairy industry with even fewer participants at all levels of production, processing, transportation and retail.    

The alternative is a centrally planned, socialist economic model that starved to death millions over the last century, then consigned the survivors to poverty for life.   Granted, another alternative is a milk quota similar to Canada's, but that is entirely outside the realm of political possibility down here, regardless of what some may tell you, and others may think.    Milk producers have not enough votes to elect a dog catcher in Marshfield County, Wisconsin, let alone restructure an industry at any cost to consumers.

At the end of 2020, the remaining dairy farmers will be those among the low cost producers of milk.   The size of each operation will not be exclusively central to low cost production and subsequent economic survival, but sufficient size will be an integral part of survival.  This been the case since the first milking machine was invented, and since the first can of milk was hauled by motor truck. 

Producing milk, however, is management sensitive, always giving smaller producers an opportunity to compete with larger dairies that may be inclined to throw cash at every problem.  That approach to problem solving seldom ends well for the entity involved.

Dairy enterprise labour will continue to divide over the next several years.  Owning and management from conception through milk production, then finishing unto slaughter, will be more often divided among different, independent farm operations, each able to execute a step faster, better and cheaper than can others.

This seems foreign to dairy production, but this has been common to poultry, pork and beef production for decades.   Actually, this has been common to every industry, livestock and otherwise, particularly since the Great War. 

One farm entity might acquire open heifers and get them pregnant to sexed semen or a beef bull, the next owner might gestate, freshen and break those heifers to milking, and sell off the calves to a professional calf raiser.  A farm that only milks cows may then buy the healthy, milking heifers at fresh seven to 21 days. After they're milked a year and fresh again, the calf would be parted out to someone that only feeds babies.  That new owner may raise those calves to breeding age.   Other operations can take spent dairy cows and feed them to optimum slaughter condition.  Each step along the way involves a possible margin on each specialized activity, but certainly not an assurance of profit for anyone, obviously.

This concept is rather antithetical to what we often read about in the popular press or online.  Yes, there is room in the market for milk, butter and cheese, produced vertically by yeomen and women, locally and in concert with nature.  It's a small percentage of a large industry, best illustrated by me holding my right index finger and thumb about two inches apart.  Feel free to be offended and write a letter to the editor, complete with righteous indignation.   I say this, however, as someone who buys a lot of high dollar, specialty dairy products and likes most of them, including the one that was made from our milk.

Organized dairy cattle breed activity will continue to contract during 2020, largely owing to fiscal pressure.  Genetic progress within each breed association will incrementally continue, generally one hearse at a time.  Genetic progress offered by each bull stud and donor dam herd will also incrementally continue, generally in responce to what milk producers want and are willing to pay for.         

Since there is an election in November, the federal government will distribute 2020 farm subsidies with an eye on the farm vote.  Red China will also be thinking about our farm vote while they negotiate and execute trade with the U.S.  Our trade negotiators have to deliver something significant and promising to the troubled ag communities of Wisconsin,  Michigan and Pennsylvania before November, and China knows this.  There are not a lot of full time farmers any more, but 85% of full time farmers always vote in every election, right along with most part time farmers and rural folk who depend upon farm prosperity.   The White House needs the ag vote, and China needs to move product both ways.  An election day deadline will motivate both sides. 

This spring and summer, a judge or two will try to treat all exhibitors equally, and some exhibitors more equally, at a couple shows, then end up looking like a fool when the top two from each class come out for the champion selections.   Also, no one born before Pres. Clinton's second term will want to judge showmanship any more...thanks be to the new PDCA guidelines and scorecard.   

This fall, World Dairy Expo shows will further run into the night, owing to even slower leading,  even more talking between the judges and their associate and time spent on extensive thought while placing the lower cuts. 

Someone, intentionally or not, will break the Expo record for number of minutes in unprepared, disjointed oratory prior to naming a Grand Champion.  A third of the ringside will find it moving.  Perhaps half will check messages and watch the time on their phones as they listen politely.  The rest will become somewhat disturbed and rather uncomfortable, me included.  

I mentioned during the introit what Churchill said about explaining why things didn't happen, so I might be doing that next year.   Over decades of predicting elections, buying and selling funds, common stock and livestock, and trading on forward contracts, I continue to bat .500...so I'm wrong fully half the time.