Commodities generally have lost value in the last week or so in comparison to their recent highs. 

Crude Oil is 13% off its high on March 8.  Natural gas is off 30%, copper off 20%, wheat is 50% off its contract high, lumber has lost 60% and aluminum is down 36% of its recent high.  I’m rounding here, and it’s important to remember that market events of recent days may be an aberration and are likely not a direct result of the recent uptick in interest rates.  Seldom does a market move this fast without some kind of world event or surprise news item that jolts the trade.

That said, September Class III Milk is $23.50 per cwt., off its contract high of $24.96.  That’s a mere 5.85% loss in value, less than even the crude oil loss that I referenced above.  It’s less of a decline that the 12% loss of the Bloomberg Commodity Index over the last 13 trading days. 

It’s also much less than the recent decrease of 60% in lumber costs, which is a rich blessing to me.  I’ll be in the food stamp line if people stop building and buying new houses they can’t afford.   Strangely, starry-eyed young people acquiring an expensive first home, thus committing themselves to a life of financial servitude, suffer from the same warped judgement as those buying expensive club calves that have little to no chance of returning a shilling in profit.  Just saying.  

At any rate, milk is kind of holding while other commodities are generally falling.  I’m not willing to predict what will happen to milk in the next 10 trading days, but I can assure you that milk, as with all commodities, is priced over time to the average cost of production.  The last producer standing is the lowest cost producer, and no its not going to be the Amish hand-milking producer with no capital and no hired labour.  Any able-bodied Amish man or woman can get a very, very good local wage with only an 8^th grade education and good work ethic.   We often figure the hours we spend farming or milking at zero labour cost, and that’s bad accounting.