By E. W.
Lang
Hindsight is 20/20, but I'm going to open with
this anyway. The week began with the
Class III Milk-Feed Index at $9.04 per cwt.
Wednesday that index was $11.03 per cwt. and was at that level for
mostly the entire trading day, and a little while on late Tuesday. By Friday, a dollar was off the Index, and it
ended the week at $9.94 per cwt.
Nine dollars, 11 dollars, ten dollars in five
trading days.
Again, hindsight is 20/20 and milk producers have
a lot of stuff to do, often in extreme cold and strong winds. Milk producers, however, generally carry a
phone and have easy access to market reports, thus are as well informed as
anyone producing a commodity anywhere in the world. There will probably be some chances to lock
in some pretty good margins going forward, just as there were in the week just
ended. It's important, however, to
remember that occasional market actions are actually speculation. A planned, consistent marketing program is a
better way to enhance the chances of a dairy farm staying in the game over
time.
I had a planned, consistent corn marketing
program ten years ago when corn was higher than it was last summer. My marketing advisor was a nationally known
guy who's on TV farm shows a lot, or at least he was at the time. Anyway, I had to put up a fair amount of
margin money, and he had this, that and the other marketing tool that each cost
a few cents per bushel in commission for him.
I heard from him a few times over two years, each time was a margin call
that required more cash.
By the time the corn was all sold, I'm thinking
that we may have been dollars even, after the margin money was all gone. My advisor, Mr. Margincall, who was mostly
an option salesman, was sporting a new toupee the next time I saw him on TV,
and those aren't cheap, or so I've been told.
Regardless, the whole corn marketing ordeal was
like buying whole life insurance, then some variable life insurance, some
universal life and a term plan, then never dying, but living forever in a
nursing home with no nursing home insurance coverage. Marketing programs can be very expensive
life insurance, in a sense. But what you
may actually need to mitigate your milk and feed price risk can be relatively
inexpensive when uniformly applied and used to avert the extreme low prices at
the cost of not getting the extreme high prices, as well. And most farmers end up needing nursing home
insurance, not life insurance, just ask your country lawyer, accountant, banker
and preacher friends.
Block cheese gained a cent this week. Barrels
gained 15. Butter gained 30 cents per
lb. Class III milk futures for the first
quarter of 2022 average $20.99 per cwt., a gain of $1.43 per cwt. Class IV for Jan. to Mar. went up 79 cents to
close at $22.25 for the three months.
Top end fresh cows at Premier in Withee,
Wisconsin, were $2300 and $2400 on a couple loads. A load of springers averaged $1975 with a top
of $2400. Most slaughter cows were 43 to
56 cents per lb.
Hay in Dyersville, Iowa, was steady to up $20 per
ton, even with extreme cold and snow covering corn stalks. Top on large squares was $275 per ton on 178
RFV alfalfa. Most large squares were
$140 to $190 per ton, and most large rounds were $120 to $160. Grass ran from $105 5o $132.
Corn and beans had a good week, even with
nitrogen fertilizer selling at 4X its recent low of two years ago. Iowa farmland parcels at 899 public auctions
averaged $12,480 per acre in December.
This was an increase of 35.3 percent for the year.