By E. W. Lang
Class III Milk-Feed Indices poked through $12 to land at an
average $12.24 per cwt for July, August and September. This is a gain of 70 cents for the week,
owing to an uptick of nine cents on Class III Milk at $24.47 and a small
decrease in corn price. $12.24 is a
level we haven’t seen for some time and may warrant some forward pricing on
feed and milk. Or not, as it could get
better, but it also might not.
The Class IV average price for July, August and September is
up 23 cents per cwt for the week at $25.85.
Those Class III and IV prices offer some decent margins for many
dairies.
I hope that milk profits are finding their way to lenders
such that when the need to borrow again visits the farm, the lender will be
willing.
I would be morally unfaithful to many of you, however, to
argue that profits should always or usually go to modernize dairies that are
already more than a generation behind in terms of size and mechanization.
Dreams and ambitions are fine for any farming endeavor,
family or otherwise, but can become a consuming nightmare when they just aren’t
economically feasible, and realities set in.
Those realities include labour and hauling costs, and this rule from
time immemorial, the market value of any commodity migrates, over time, to the
average cost of production.
Block cheese lost five cents at $2.27 per lb. Barrels lost a penny at $2.24, and butter
gained three cents this week in the four days of trading and is currently $2.91
per lb. on the Chicago Mercantile Exchange (CME). Oh, and Dry Whey is up a significant four
cents at 56 cents per lb.
I looked at some specials at one of Iowa’s major grocery
chains and found the following prices that were interesting:
Butter was on special at $3 per lb., compared to $2.91 on
the CME.
Cheddar was $5 per lb., while blocks were $2.27 on the
CME.
Whole, 2% and skim milk were all $1.99 per gallon (limit 1
per customer) while the government regulated Class I Mover equates to $1.16 per
gallon.
From time to time we hear that milk, cheese and butter
prices should somehow be regulated to a profitable level for all milk producing
farmers, or at least the ones who are our own size or smaller.
I could be a popular writer in some circles by regularly
making this kind of argument to modest and small milk producers. I could also argue that Lyndon Johnson had
JFK shot, Elvis lives in town and drives a school bus, the 2020 election was
rigged, and the lunar landings were staged on the set of ‘Laugh In.' Actually, that seems plausible, given the
technology of the time.
Anyway, the store prices that I quoted may be isolated,
incidental and possibly intentional loss-leading store promotions intended to
draw customers in off the street and to the back of the store.
These recent store prices are also what is best and worst
about our free market system in the United States. Despite its economic cruelty to farmers,
processors, truckers and store owners from time to time, the prospect of
starvation among our people is pretty small when wise life choices and buying
decisions govern.