Milk Price- Please read Mod note in post #1

kowtow

jaymla627 wrote:

The euro is starting to strengthen again, so where is that going to leave things...hopefully big phil will be kind to us next week

We are in the hands of a currency we don't control and a minister we can't control.

God help us

jaymla627

kowtow wrote: »

We are in the hands of a currency we don't control and a minister we can't control.

God help us

Pretty worrying how much it has strengthened in relation to the us dollar and especially the kiwi dollar, even if their is another rise in the next gdt the way currency markets are going, it gives co-ops here the perfect excuse to cut prices again....

mf240

Looking at the glanbia calendar in the dairy this morning.

And the milk was collected today. So the milk that i put in the tank this evening. . I wont know how much ill be paid for it untill mid october.

alps

mf240 wrote: »

Looking at the glanbia calendar in the dairy this morning.

And the milk was collected today. So the milk that i put in the tank this evening. . I wont know how much ill be paid for it untill mid october.

You guys collected every 3 or 4 days?. Monday is 31st Aug. Are you sure glanbia do calenders?

stanflt

mf240 wrote: »

Looking at the glanbia calendar in the dairy this morning.

And the milk was collected today. So the milk that i put in the tank this evening. . I wont know how much ill be paid for it untill mid october.

Today's and Saturdays milk included in August milk- sun onwards is sept which is a 5 week month

alps

stanflt wrote: »

Today's and Saturdays milk included in August milk- sun onwards is sept which is a 5 week month

So you guys trade in blocks of weeks? If you purchase input on Monday 31st, are they charged from the 5 week month?
Is there an advantage to this system or is it purely to facilitate administration, which seems smart as you can always keep Mondays work to Monday etc?

stanflt

alps wrote: »

So you guys trade in blocks of weeks? If you purchase input on Monday 31st, are they charged from the 5 week month?
Is there an advantage to this system or is it purely to facilitate administration, which seems smart as you can always keep Mondays work to Monday etc?

Yes blocks of 4 or 5 weeks one 5 week in 3 usually

All purchases the same as month end is the same for trading as milk production

mf240

stanflt wrote: »

Today's and Saturdays milk included in August milk- sun onwards is sept which is a 5 week month

This evenings milk will be collected on sunday. September in glanbia land.

Doesnt make much odds its just something i noticed.

WheatenBriar

jaymla627 wrote: »

Pretty worrying how much it has strengthened in relation to the us dollar and especially the kiwi dollar, even if their is another rise in the next gdt the way currency markets are going, it gives co-ops here the perfect excuse to cut prices again....

That is simply not the case
The euro has not strengtened
It briefly hit $1.15 last week but is at $1.12 today
This time last year it was around $1.30 and as high as $1.40 at times

Dawggone

WheatenBriar wrote: »

That is simply not the case
The euro has not strengtened
It briefly hit $1.15 last week but is at $1.12 today
This time last year it was around $1.30 and as high as $1.40 at times

I thought it a bit funny that investors found the € a safe haven with the turmoil in equities.
I wonder are these investors the same ones that never pass an excuse to have a swipe at it?

Dawggone

Interesting article from Tony Baldwin in the biz section of today's NZ Herald.

Sorry can't post a link.
Gives a good perspective on Fonterra and the route that Irish processors should NOT follow.

Sacrolyte

Dawggone wrote: »

Interesting article from Tony Baldwin in the biz section of today's NZ Herald.

Sorry can't post a link.
Gives a good perspective on Fonterra and the route that Irish processors should NOT follow.

Whoa. That was a marathon read!
Interesting and mostly accurate discription of the past but as for the future now where did I leave my crystal ball.

Buford T. Justice XIX

Dawggone wrote: »

Interesting article from Tony Baldwin in the biz section of today's NZ Herald.

Sorry can't post a link.
Gives a good perspective on Fonterra and the route that Irish processors should NOT follow.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11503190

alps

Dawggone wrote: »

Interesting article from Tony Baldwin in the biz section of today's NZ Herald.

Sorry can't post a link.
Gives a good perspective on Fonterra and the route that Irish processors should NOT follow.

Great article, but methinks too much has already been poured into the stainless steel at this stage to return.

pedigree 6

Dawggone wrote: »

Interesting article from Tony Baldwin in the biz section of today's NZ Herald.

Sorry can't post a link.
Gives a good perspective on Fonterra and the route that Irish processors should NOT follow.

Thank feck for the west cork co-ops. Any farms for sale down there?

kowtow

On the subject of European support / intervention prices one important point occurs to me whenever I see this discussed in the press.

I am aware that the following point will be contentious, but it needs to be said nevertheless.

There is no sane argument whatsoever for increasing intervention prices to any level which would relieve the pressure on Irish dairy farmers. Intervention exists to stabilise a milk supply and ensure that producers continue in business (basically food security). The Irish industry has little or nothing to do with actual demand for milk - Irish dairy farming is overwhelmingly a speculative industry seeking to profit by selling milk into the world's surplus milk market (the powder market). Leaving aside branded products and high value items (baby powder?) bluntly there is no actual demand for Irish milk per se - it just adds to the world's marginal surplus market and sometimes prices are high enough for us to enjoy a profit given local conditions and low cash costs.

The world has not asked us to produce this milk, and very little of it is required to satisfy the need for food security. In contrast, there is some sense at least (although I don't agree with it) in supporting price to a level which ensures that every European country is able to produce it's fresh dairy requirement - in our case, as is well known, we are miles and miles past this point.

As a matter of fact to subsidise intervention to the point where it made a difference here would, by definition, be an encouragement to over production and therefore self defeating. I'm quite sure that the officials in Brussels have some grasp of this even if our representatives at home seem to struggle with it.

Panch18

kowtow wrote: »

On the subject of European support / intervention prices one important point occurs to me whenever I see this discussed in the press.

I am aware that the following point will be contentious, but it needs to be said nevertheless.

There is no sane argument whatsoever for increasing intervention prices to any level which would relieve the pressure on Irish dairy farmers. Intervention exists to stabilise a milk supply and ensure that producers continue in business (basically food security). The Irish industry has little or nothing to do with actual demand for milk - Irish dairy farming is overwhelmingly a speculative industry seeking to profit by selling milk into the world's surplus milk market (the powder market). Leaving aside branded products and high value items (baby powder?) bluntly there is no actual demand for Irish milk per se - it just adds to the world's marginal surplus market and sometimes prices are high enough for us to enjoy a profit given local conditions and low cash costs.

The world has not asked us to produce this milk, and very little of it is required to satisfy the need for food security. In contrast, there is some sense at least (although I don't agree with it) in supporting price to a level which ensures that every European country is able to produce it's fresh dairy requirement - in our case, as is well known, we are miles and miles past this point.

As a matter of fact to subsidise intervention to the point where it made a difference here would, by definition, be an encouragement to over production and therefore self defeating. I'm quite sure that the officials in Brussels have some grasp of this even if our representatives at home seem to struggle with it.

And yet not 12 months ago the price of milk was 40 cent or more and the world couldn't get enough milk - Irish milk included.

freedominacup

Dawggone wrote: »

I thought it a bit funny that investors found the € a safe haven with the turmoil in equities.
I wonder are these investors the same ones that never pass an excuse to have a swipe at it?

And they certainly never had to deal at the sharp end with the realities of a currency as volatile as the púnt. Anyone for 23/25% interest on term loans.

Deepsouthwest

pedigree 6 wrote: »

Thank feck for the west cork co-ops. Any farms for sale down there?

Dearest agricultural land in Ireland is what they used to say about the Barryroe area of west cork a few yrs ago. A lot of land now making €350/€400 an acre to rent. Making €250+ in my part, and that's for a lot more marginal land. Makes the €350/€400 sound good value!
I'd gladly swap my lot for a farm 2/3's the size up in tipp/midlands/southeast area, but I'd miss my sea view!

kowtow

Deepsouthwest wrote: »

Dearest agricultural land in Ireland is what they used to say about the Barryroe area of west cork a few yrs ago. A lot of land now making €350/€400 an acre to rent. Making €250+ in my part, and that's for a lot more marginal land. Makes the €350/€400 sound good value!
I'd gladly swap my lot for a farm 2/3's the size up in tipp/midlands/southeast area, but I'd miss my sea view!

Still the dearest in the world according to the FT.

Still, we've got the oil at least. And the odd site.

kowtow

Panch18 wrote: »

And yet not 12 months ago the price of milk was 40 cent or more and the world couldn't get enough milk - Irish milk included.

The thing about the powder market is that it has a buffering capacity - product can be stored, bought ahead, and - one suspects - at some level one supply of protein can be exchanged for another. They aren't turning this powder into vintage Camembert or fresh butter.

So we can assume - in my opinion - that for the most part milk prices are driven by the various liquid & premium markets around the world. When liquid supplies are short(er) than usual, less surplus is cast off into the powder market and prices there run higher - never as high as liquid, as far as I am aware, which would I think be the inflection we would be looking for to prove that there was a genuine shortage of powder as opposed to less surplus liquid than usual with a tightening of powder as a consequence.

It's possible that I am wrong on this - but it's actually really important. The supplier in a liquid / balanced demand country has an inbuilt advantage in that the first portion of his milk is actually in fresh demand - he benefits from the liquid price. He will continue to milk away (absent any form of quota) until the price he gets for his milk (in the powder market) is basically the cost of the feed that produces it. Hence the close relationship between NZ milk prices and feed prices. Because countries can put powder in inventory, they will continue to buy at these low prices - up to a point - because they are essentially banking the low global feed price.

I suppose what we should be looking for is the powder price to drop right down to or below the cost of feed as an indication that the world has taken on as much cheap milk as it can absorb. This may be what has begun to happen this year in NZ. You are looking for the point where the American producer has no market for his milk, no matter how cheaply he can produce it, and culls the herd as a result.

Does it appear that NZ has hit this point before the US has? And if so, what does that tell us?

darragh_haven

Deepsouthwest wrote: »

Dearest agricultural land in Ireland is what they used to say about the Barryroe area of west cork a few yrs ago. A lot of land now making €350/€400 an acre to rent. Making €250+ in my part, and that's for a lot more marginal land. Makes the €350/€400 sound good value!
I'd gladly swap my lot for a farm 2/3's the size up in tipp/midlands/southeast area, but I'd miss my sea view!

You'd swap coop and milk price too. I'm sure it's the sea view that your fierce fond of.....

freedominacup

kowtow wrote: »

The thing about the powder market is that it has a buffering capacity - product can be stored, bought ahead, and - one suspects - at some level one supply of protein can be exchanged for another. They aren't turning this powder into vintage Camembert or fresh butter.
[/equote]

The correlation between veg protein and milk protein is very strong. Once our returns go much above 35c/l veg protein becomes a viable alternative for some food processors. They start to use the veg alternatives lowering demand and then it's probably a case of how far forward they buy the alternatives and how far and fast powder prices drop before they come back in.

Buford T. Justice XIX

kowtow wrote: »

The thing about the powder market is that it has a buffering capacity - product can be stored, bought ahead, and - one suspects - at some level one supply of protein can be exchanged for another. They aren't turning this powder into vintage Camembert or fresh butter.

So we can assume - in my opinion - that for the most part milk prices are driven by the various liquid & premium markets around the world. When liquid supplies are short(er) than usual, less surplus is cast off into the powder market and prices there run higher - never as high as liquid, as far as I am aware, which would I think be the inflection we would be looking for to prove that there was a genuine shortage of powder as opposed to less surplus liquid than usual with a tightening of powder as a consequence.

It's possible that I am wrong on this - but it's actually really important. The supplier in a liquid / balanced demand country has an inbuilt advantage in that the first portion of his milk is actually in fresh demand - he benefits from the liquid price. He will continue to milk away (absent any form of quota) until the price he gets for his milk (in the powder market) is basically the cost of the feed that produces it. Hence the close relationship between NZ milk prices and feed prices. Because countries can put powder in inventory, they will continue to buy at these low prices - up to a point - because they are essentially banking the low global feed price.

I suppose what we should be looking for is the powder price to drop right down to or below the cost of feed as an indication that the world has taken on as much cheap milk as it can absorb. This may be what has begun to happen this year in NZ. You are looking for the point where the American producer has no market for his milk, no matter how cheaply he can produce it, and culls the herd as a result.

Does it appear that NZ has hit this point before the US has? And if so, what does that tell us?

I'm afraid you're going to tell us:(

Good post, btw.

Dawggone

kowtow wrote: »

On the subject of European support / intervention prices one important point occurs to me whenever I see this discussed in the press.

I am aware that the following point will be contentious, but it needs to be said nevertheless.

There is no sane argument whatsoever for increasing intervention prices to any level which would relieve the pressure on Irish dairy farmers. Intervention exists to stabilise a milk supply and ensure that producers continue in business (basically food security). The Irish industry has little or nothing to do with actual demand for milk - Irish dairy farming is overwhelmingly a speculative industry seeking to profit by selling milk into the world's surplus milk market (the powder market). Leaving aside branded products and high value items (baby powder?) bluntly there is no actual demand for Irish milk per se - it just adds to the world's marginal surplus market and sometimes prices are high enough for us to enjoy a profit given local conditions and low cash costs.

The world has not asked us to produce this milk, and very little of it is required to satisfy the need for food security. In contrast, there is some sense at least (although I don't agree with it) in supporting price to a level which ensures that every European country is able to produce it's fresh dairy requirement - in our case, as is well known, we are miles and miles past this point.

As a matter of fact to subsidise intervention to the point where it made a difference here would, by definition, be an encouragement to over production and therefore self defeating. I'm quite sure that the officials in Brussels have some grasp of this even if our representatives at home seem to struggle with it.

Short answer...politics.
Of course there should be NO price supports whatsoever but farmers and processors have political clout, and they know how to use it.

Many moons ago I was driving a combine for the American harvest. There were many crops in Texas that were poor and we would go in and cut some representative acres and weigh it. The farmer then made his application for aid and we would return some days later and finish. The point I'm making is that everything was "supported" in some way.

If banks feel the pinch they are bailed out.
If stock markets are tanking QE is ramped up.

In a perfect business world there would be no market interference whatsoever. However we all know that no market is like that. I'm a little conscious of the social aspect. Do we really want the marginal producers (mostly small family farms) to go to the wall? So if it takes some support and market interference to keep them in business, so be it.

Imo there is

RightTurnClyde

What kills me is that Coveney has been harping on for the last 4 years about all the milk we can produce, how competitive we are, and how cheaply we can produce it.
Now that the pressure is on, on our competition more than us, he's leading the cavalry out to Brussels to lift the intervention price and resuscitate our competition. Idiot.

alps

RightTurnClyde wrote: »

What kills me is that Coveney has been harping on for the last 4 years about all the milk we can produce, how competitive we are, and how cheaply we can produce it.
Now that the pressure is on, on our competition more than us, he's leading the cavalry out to Brussels to lift the intervention price and resuscitate our competition. Idiot.

Stop believing the opinion formers about us being competitive. Farmers need to do their own figures and have their own opinion on how comptitive we are. I'm sick of people quoting teagasc on how much it costs to produce milk....why can't farmers quote how much it costs them to produce milk. The real cost of producing milk can be seen in the teagasc led greenfield farm, and that is running a line so close to being broke that it just ain't funny.
Know your own figures and don't let others including the minister spout chyte at you in relation to competitiveness.
Competitiveness relates to margin, not just least cost.
We can be as brovado as you like but we're not going to win a game of poker against the rest.

pedigree 6

I was just going to ask how greenfields is doing, what with paying no tax and getting free quota. Also just wondering do they have to buy any shares.

Timmaay

pedigree 6 wrote: »

I was just going to ask how greenfields is doing, what with paying no tax and getting free quota. Also just wondering do they have to buy any shares.

they obviously pay tax??? And they don't have shares, which means they don't get the milk price top up.

RightTurnClyde

alps wrote: »

Stop believing the opinion formers about us being competitive. Farmers need to do their own figures and have their own opinion on how comptitive we are. I'm sick of people quoting teagasc on how much it costs to produce milk....why can't farmers quote how much it costs them to produce milk. The real cost of producing milk can be seen in the teagasc led greenfield farm, and that is running a line so close to being broke that it just ain't funny.
Know your own figures and don't let others including the minister spout chyte at you in relation to competitiveness.
Competitiveness relates to margin, not just least cost.
We can be as brovado as you like but we're not going to win a game of poker against the rest.

Alps, I agree with you 110%. We are competitive at the moment on ( as kowtow put it ) "free land and free labour". But now that quotas are gone that "free land and labour" will soon run out.
I'm referring more to the fact that Coveney ( et al) can't see their ass from their elbow. Going out now to Brussels, shows he is speaking out of 2 sides of his mouth. Him going to Brussels is proof that even he doesn't believe we're competitive...or someone that has his ear believes we"re not competitive.