5 year milk glut

royalmeath

http://www.agriland.ie/news/goldman-sachs-predicting-5-year-milk-glut/

If as predicted we are entering a half decade of international over supply then
things surely cannot look good for anyone who has borrowed heavily for expansion or even new entrants. Imagine 5 years of milk prices of 20 cent a litre and throw in a year like 2012 and the prospects are troubling.

larrymiller

royalmeath wrote: »

http://www.agriland.ie/news/goldman-sachs-predicting-5-year-milk-glut/

If as predicted we are entering a half decade of international over supply then
things surely cannot look good for anyone who has borrowed heavily for expansion or even new entrants. Imagine 5 years of milk prices of 20 cent a litre and throw in a year like 2012 and the prospects are troubling.

What did farmers get in 2009? That was the bad one wasnt it?

whelan2

larrymiller wrote: »

What did farmers get in 2009? That was the bad one wasnt it?

i averaged 27.7 cpl, as i said earlier in the week, we survived it.... wouldnt want another one like it. The problem would be where there where 2 dire years in a row

keep going

Did anyone ever come across a survey of the cost of produceing milk internationaly not the milk price

tomwaterford

larrymiller wrote: »

What did farmers get in 2009? That was the bad one wasnt it?

there was a lot on the brink of getting out of dairying at the time....as I remember...it was after 2 years of bad enough weather at the time....with only mediocore enough prices in 2008.....no mind the crash in the general econmy and the complete lack of credit

its some change in five years that's for sure....what will it be like in five more

sheebadog

Let's not get carried away. Reality is that it was one poor (not bad!) year in circa 30. FFS!!!

mf240

It was easy to buy quota in 09. And rolled barley was 130 a ton.

It was the weather that year that fcuked me!!

freedominacup

2 billion litres would be sorted by an increase in consumption in China amounting to around 4 cent/week for your average Chinese consumer. If that's what the glut amounts to we'll be grand. Sounds like a copy editor was stuck for a headline.

Milked out

mf240 wrote: »

It was easy to buy quota in 09. And rolled barley was 130 a ton.

It was the weather that year that fcuked me!!

+1 had to buy in bales in July in 09' was a wet year for us anyway

frazzledhome

sheebadog wrote: »

Let's not get carried away. Reality is that it was one poor (not bad!) year in circa 30. FFS!!!

Correct, 07 was the best I remember as price rose but inputs stayed low in 08 we had a high price but a massive jump in energy 09 was a low price with high energy prices. I think what did more damage was all the grant building done in 08-9 and the repayments kicked.

There were people hit with a perfect storm of credit crunch, payments they under budgeted for, low price, high inputs, a low milk price and a wet back end.

freedominacup

frazzledhome wrote: »

There were people hit with a perfect storm of credit crunch, payments they under budgeted for, low price, high inputs, a low milk price and a wet back end.

That'll fcuk yer year up no doubt.

Viewtodiefor

freedominacup wrote: »

2 billion litres would be sorted by an increase in consumption in China amounting to around 4 cent/week for your average Chinese consumer. If that's what the glut amounts to we'll be grand. Sounds like a copy editor was stuck for a headline.

It's funny how you can totally dismiss it without a second thought!

whitebriar

freedominacup wrote: »

Sounds like a copy editor was stuck for a headline.

Do ya know what,that's exactly what it is,predicting output for 2 years never mind 5 years is laughable,I stopped reading at that point

freedominacup

Viewtodiefor wrote: »

It's funny how you can totally dismiss it without a second thought!

Follow the money. What plays have goldman sachs made in dairy futures or dairy processors recently? Do you really think they published a note like this out of the goodness of their hearts?

The "glut" they are predicting amounts to around 0.3 of a percent of current production. Hands up everybody who'd take Ireland being 0.3 of a percent over quota pn the first of April next year if they were offered it today.

Actually the more I think about it the more I dismiss it. 0.3 of a percent is so small that it would be well within the margin of error for a six month prediction never mind to say one for the next five years.

Greengrass1

Tbh I think this is just scare mongering by NZ.
They know there is going to be a lot more competition in the market post 2015 and they want to have as much as they can them selves.
I remember reading an article on agriland a few weeks ago about fonterra and the man they interviewed was asking the question how come they aren't turning more profit or the same profit compared to Friesland Campania. They are as big as them as regards milk pool but are not turning near the amount if profit they should.

Makes ye think

sheebadog

freedominacup wrote: »

Follow the money. What plays have goldman sachs made in dairy futures or dairy processors recently? Do you really think they published a note like this out of the goodness of their hearts?

The "glut" they are predicting amounts to around .3 of a percent of current production. Hands up everybody who'd take Ireland being .3 of a percent over quota pn the first of April next year if they were offered it today.

Excellent Free. Follow the money.......

conor t

whitebriar wrote: »

Do ya know what,that's exactly what it is,predicting output for 2 years never mind 5 years is laughable,I stopped reading at that point

Ye,3 or 4 months is the most you can look forward really if your to have some degree of accuracy

Cow Porter

too many variables involved to predict agri markets more than anything, with weather, livestock, demand, disease, famine or over supply etc etc

all we can do is be optimistic

Brown Podzol

frazzledhome wrote: »

Correct, 07 was the best I remember as price rose but inputs stayed low in 08 we had a high price but a massive jump in energy 09 was a low price with high energy prices. I think what did more damage was all the grant building done in 08-9 and the repayments kicked.

There were people hit with a perfect storm of credit crunch, payments they under budgeted for, low price, high inputs, a low milk price and a wet back end.

Plus the 40,40,20 grant payment delay due to the pig feed scandal.

Deepsouthwest

Cow Porter wrote: »

too many variables involved to predict agri markets more than anything, with weather, livestock, demand, disease, famine or over supply etc etc

all we can do is be optimistic

Let's not be over optimistic, cow numbers and dairy AI usage are a fair indicator of future production, and we all now where they're going at the moment. Plus it could take v little to upset the whole thing as we saw with the Chinese babies/melamine scare in 09, in which we were powerless. Lots of rumours circulating recently about connections between johnes, milk and and a human disease which I don't even want to put in print. If that was to raise it's ugly head it could have a catastrophic effect on all of us and our markets. I'm not scaremongering, and I hope I'm wrong, but there's a lot us expanding with no insurance against another hiccup like 09, so let's proceed with caution!

Brown Podzol

Goldman Sachs are the people who brought us junk bonds and subprime mortgage bonds amongst other creative financial products, take what they say with a pinch of salt. I'd put more emphasis on what the research team in Rabobank say. In fact if your worried about the milk market over the next few years then go and buy shares in the the big dairy co's like Nestle, Danone etc or the Tesco's because as we know even though the price to the farmer falls the price in the supermarkets doesn't so people along the supply chain will make greater profits and share price will reflect this.

MiloDublin

Where did the oversupply prediction come from? As the middle classes in China and India switch from tea to lattes/cappuchinos the demand for milk has soared, a market the New Zealanders have opened up.

mf240

There may well be an oversupply and a drop in prices but theres not a hope in hell of it lasting five years. 18 to 24 months would be about as long as it would take for things to realign.

frazzledhome

Make no decisions based on info from anyone with vested interest. Analyse and stress test your own budgets is how I'd do it. Play with the average prices for the year and see can you build surplus at good price and absorb a bad price. No investment from cash flow and only on what's necessary not handy

sheebadog

Jeez lads ye wouldn't know a bad run if it bit ye in the leg.
Cheer up for Chrissakes it might never happen !!!!

Deepsouthwest

mf240 wrote: »

There may well be an oversupply and a drop in prices but theres not a hope in hell of it lasting five years. 18 to 24 months would be about as long as it would take for things to realign.

18 to 24 months of a bad milk price would have serious implications for a lot of lads!

Deepsouthwest

sheebadog wrote: »

Jeez lads ye wouldn't know a bad run if it bit ye in the leg.
Cheer up for Chrissakes it might never happen !!!!

If u wouldn't even consider selling a field of wholecrop for €800 an acre, ur not doing too bad either!

onyerbikepat

keep going wrote: »

Did anyone ever come across a survey of the cost of produceing milk internationaly not the milk price

Coonagh

frazzledhome wrote: »

Make no decisions based on info from anyone with vested interest. Analyse and stress test your own budgets is how I'd do it. Play with the average prices for the year and see can you build surplus at good price and absorb a bad price. No investment from cash flow and only on what's necessary not handy

This is the absolute best advice on this subject, too many producers regardless of what sector they are in are too preoccupied with forces outside of their control, focusing on controlling what's inside your farm gate is the best way to handle market volatility.

tanko

Why is France such an expensive place to produce milk, it's similar to Saudi Arabia.

darragh_haven

tanko wrote: »

Why is France such an expensive place to produce milk, it's similar to Saudi Arabia.

Unions.......

sheebadog

tanko wrote: »

Why is France such an expensive place to produce milk, it's similar to Saudi Arabia.

No point asking me, it costs me 42cpl to produce!

mf240

tanko wrote: »

Why is France such an expensive place to produce milk, it's similar to Saudi Arabia.

Because french farmers wont work 100 hrs a week for peanuts, and hired labour is expensive.

mahoney_j

frazzledhome wrote: »

Make no decisions based on info from anyone with vested interest. Analyse and stress test your own budgets is how I'd do it. Play with the average prices for the year and see can you build surplus at good price and absorb a bad price. No investment from cash flow and only on what's necessary not handy

Excellent advice too many of us are too worried about things that happen outside our farm gate whilst not controlling what we can,our cows,grass,solids,breeding etc.

tanko

sheebadog wrote: »

No point asking me, it costs me 42cpl to produce!

Can you say how much you're getting paid for it at the moment?

sheebadog

tanko wrote: »

Can you say how much you're getting paid for it at the moment?

37 cpl + vat.
Guaranteed 39 for August and sept. After that who knows?

whelan2

conor t wrote: »

Ye,3 or 4 months is the most you can look forward really if your to have some degree of accuracy

so anyone hazard a guess at the next 3-4 months?

stretch film

whelan2 wrote: »

so anyone hazard a guess at the next 3-4 months?

Not with any great degree of certainty no. Glanbia were planning a further 3 cent cut , prob over 2 mths, and already the market has stabilised/turned.

stretch film

sheebadog wrote: »

37 cpl + vat.
Guaranteed 39 for August and sept. After that who knows?

I take it ALL costs are included in the 42 c/l ie. Your salary and all repayments on loans etc unlike the profit monitor here.

sheebadog

stretch film wrote: »

I take it ALL costs are included in the 42 c/l ie. Your salary and all repayments on loans etc unlike the profit monitor here.

Wages.
6 salaries but it skews the process as dairy is not the primary enterprise.

stretch film

sheebadog wrote: »

Wages.
6 salaries but it skews the process as dairy is not the primary enterprise.

Do I take it all developments of the business are done through finance. Whats paying better than dairy and is it simply because its a more efficient use of expensive labour.

keep going

onyerbikepat wrote: »

Probaly about right .most seem to think this article shows the folly of expansion whereas I think it shows the importance of keeping the system low cost, not all expansion has to be high borrowings

sandydan

tanko wrote: »

Why is France such an expensive place to produce milk, it's similar to Saudi Arabia.

from fellows who worked on farms there for a while costs vary according to area to area some area like Ireland other parts have to cope with severe drought during summer months,and harvested crops fed for periods.one chap on farm where hay is main crop said other swift variation in weather pattern apply locally in other areas ,at start of summer hay making weather can change swiftly and housing is suddenly a requirement with hay then wrapped as haylage,cows housed for couple of days and out again, these are some of extremes but it costs. must say though French farmers are vocal at best of time and not afraid to take to highways to fight their cause,
wages cant be major issue there ,2 of those i spoke to were getting around €200 + cabin to sleep in ,bought own food outside working times, same as if working in pubs or shops.

sheebadog

sandydan wrote: »

from fellows who worked on farms there for a while costs vary according to area to area some area like Ireland other parts have to cope with severe drought during summer months,and harvested crops fed for periods.one chap on farm where hay is main crop said other swift variation in weather pattern apply locally in other areas ,at start of summer hay making weather can change swiftly and housing is suddenly a requirement with hay then wrapped as haylage,cows housed for couple of days and out again, these are some of extremes but it costs. must say though French farmers are vocal at best of time and not afraid to take to highways to fight their cause,
wages cant be major issue there ,2 of those i spoke to were getting around €200 + cabin to sleep in ,bought own food outside working times, same as if working in pubs or shops.

"Qualified" farm workers are €35k to €50k/ annum. Multiply by two for real cost(prsi etc).
Include nine weeks of paid holidays!

Who's the boss ?????

EamonKilkenny

sheebadog wrote: »

"Qualified" farm workers are €35k to €50k/ annum. Multiply by two for real cost(prsi etc).
Include nine weeks of paid holidays!

Who's the boss ?????

Only nine weeks!! That's ridiculous, how do you manage their holidays. Can u make them take it off peak or can they choose when they want?

sheebadog

EamonKilkenny wrote: »

Only nine weeks!! That's ridiculous, how do you manage their holidays. Can u make them take it off peak or can they choose when they want?

3 weeks when I want.
6 weeks when they want.


I hate the "them and us" shyte.
No I in team and all that.

EamonKilkenny

sheebadog wrote: »

3 weeks when I want.
6 weeks when they want.


I hate the "them and us" shyte.
No I in team and all that.

That's a lot of paid leave, but if they are giving their all otherwise you can't ask for much more. Regarding any paid labour, you're right, they should also be working "with" you, not "for" you. It makes a big difference moral wise I think.

Just realised it's not dairy farming general and I am gone off topic, sorry.

tismesoitis

More bad news Dairy lads.....and Lassie
http://www.agriland.ie/news/milk-production-minus-cow/

keep going

tismesoitis wrote: »

More bad news Dairy lads.....and Lassie
http://www.agriland.ie/news/milk-production-minus-cow/

For sale 94 well bred fr cows, apply to keep going c/oboards.ie.genuine sale, owner changing his system of farming to something with better prospects but he hasnt figured that out yet

Crossakiel

Maybe you dairy guys should be considering beef!!

http://www.agriland.ie/news/dairy-volatility-hit-3-4-months/

Greengrass1

keep going wrote: »

For sale 94 well bred fr cows, apply to keep going c/oboards.ie.genuine sale, owner changing his system of farming to something with better prospects but he hasnt figured that out yet

For sale. 141 MF 5610. 300+ hrs. Selling due to being scared of milk price.
Trade ins considered