By  E. W. Lang

These last two weeks have been rather a snoozer for the milk and dairy product markets. Two mid-week holidays precipitated raw milk at a discount everywhere, and it went somewhere. I saw no reports of milk dumping, and not much was exciting.

For the week ending Dec. 21 dairy cow slaughter was down 7.2% from a year earlier.  It looks like 2019 dairy cow slaughter will be up 2% from 2018.

December Class III Milk closed at $19.37. January ended the week at $16.93 per cwt., down 17 cents for the week. Calendar 2020 averages $17.33 on Class III, $17.80 on Class IV and $9.53 on the Milk-Feed Index. That Index was $11.05 a few weeks ago when barrel cheese was at or near a record price for a while.

For the week, Block Cheese was up six cents at $1.89 per lb. Barrels were up four at $1.64. Butter was down 18 at $1.95. Whey and non-fat dry milk were...nevermind, no one cares.

There were a couple early news item's out when I got up at four o'clock this morning. We killed an Iranian General and all the people gathered in protest. Market futures were down well over one percent, and the Volatility Index (fear index) was up an incredible +26%. At the close today, Wall St. indices were down less than one percent and volatility was up only 5%.

All told, that international incident and subsequent reaction created no discernable market response, just as has every trade announcement and other news item of recent weeks.

Corn lost five cents per bushel today, and bean meal lost four dollars per ton. I could argue that this was in response to the Iranian thing, or I could argue that it was because of Global Freezing or too many internets. Each argument could generate a brief discipleship of sorts, if delivered in convincing fashion.

Sometimes market commentary is like placing a cow class at the fair. I went to the 1992 Holstein Type Conference in Syracuse, New York, and specifically remember the moderator, Dr. Dickson, saying several times, "Often it's not how you place the class, it's what you decide to include in your reasons."

The other news item that I saw was the death of KHW Regiment Apple-Red-ET. For those of you who are unfamiliar with the registered breeding segment of the dairy industry, Apple was a cow that was purchased by a syndicate in June of 2008 for one million dollars. This was before we actually could look at DNA and ascertain reliable estimates of what a cow could or should transmit to offspring.

When Apple sold, I immediately assumed there was some sort of arrangement where X dollars were paid on sale day, followed by X dollars if and when this or that benchmark was achieved for ova produced, shows won, or total dollars in sales revenue were generated.  I thought it possible that the real purchase price was somehow a fraction of the price announced. 

It's my understanding that there were terms offered that allowed payment for the cow over 12 months, but the one million dollar price was actually paid in full by the buying syndicate, with the sellers retaining 50% ownership. The buyers in fact risked wealth in the pursuit of profit, mitigated by mortality insurance on the purchase price.   Note here that this cow was purchased when milk was $20.25 and paid for when milk was $9.97 per cwt., all as the Great Recession consumed the United States' economy. 

There have been other $1 million dollar cows and bulls, some backed by actual, completed dollar transactions, some not. Public auctions of high dollar registered livestock often include individual sales that are deceptive in one way or another. I've been a part of this kind of thing several times over decades, so feel free to cast the first stone.

I am pretty certain, however, that no other $1 million bovine female, beef or dairy, has actually generated an accrued lifetime profit. I've been told by two reliable sources that Apple made a profit from lifetime sales of live offspring and embryos, after depreciation and other expenses.   The cow was prolific and top heavy with pleasing genetic traits that remained in demand over her lifetime.

Conversely, there are the many genetic investments that become a sinking vessel immediately upon possession by a new owner. I know this as well as anyone, and many of you know this better than I.  So, don't go out looking for expensive dairy cows to buy in the interest of generating wealth, or even making a living.  Most end up being a recreational expense, not a wise investment.  

Among the highest income vocations in the U.S. are anesthesiologists and cardiologists. Animal breeding is No. 514, right under owning a leather goods store, so most investments don't turn out as well as the Million Dollar Apple.