Dairy chit chat II

mahoney_j · 30-08-2017 04:32PM

Henwin wrote: »

hey, we got a letter yest from kerry co-op, offering a new milk contract for 3 years, 2018, 19 and 20. its over 8 months from march to october.
the price payable is at A=£6.3624 PER KG OF PROTEIN and B=£3.1812 per keg of butterfat less C value of 4cpl which equates to 31 cpl, inclusive of vat.
Interested suppliers can decide between 5%, 10% or a % between 11-20%.
So we are deciding now whether we will sign it or not.
Our solids are fairly poor with protein at 3.23 and fat at 3.88 so we would be lower than 31cpl.
We signed it the last time and we were happy with it as the price went down to 24 cent so we gained roughly 5,000 euro if my calculations are correct.
But now with the price at 33 cent, i am a bit more cautious about this one.
Where do ye guys reckon the price of milk will be over the next 3 years. I suppose its impossible to know. it was nice to have that safety net of 20% of our milk secure but the last couple of months we are losing money on the scheme.
We are thinking of not signing it but will make up our minds in the next few weeks.

Pure guess work guessing where price will be for 3 years.at 31 cent I'd 100%!fix 10/15%!price will go higher and will definitely go lower you'll get over loosing out when price is higher but be damn glad of your fixed portion when milk tanks .lots will disagree with these schemes but I think there vital now to protect a portion of your income .we in this country are primirally commodity producers and they are equally volatile in price

C0N0R · 30-08-2017 06:16PM

Are you making sufficient profit at 31 cpl? If so I'd be signing up for 20%. Garuanteed profit, what's not to like about that.

visatorro · 30-08-2017 07:58PM

C0N0R wrote: »

Are you making sufficient profit at 31 cpl? If so I'd be signing up for 20%. Garuanteed profit, what's not to like about that.

Lad around here reckons he's making a fortune if he's getting more than 17 cent. I got this fired at me from non farming type's recently. Fecking genius altogether.

Henwin · 30-08-2017 08:26PM

C0N0R wrote: »

Are you making sufficient profit at 31 cpl? If so I'd be signing up for 20%. Garuanteed profit, what's not to like about that.

As we are relatively new to dairying, 6 years now, we have a lot of loans still to pay off, and the last few years were very tight so few euro counts. The loans shud be cleared by 2020 and then we will be doing fine hopefully.

mahoney_j · 30-08-2017 08:57PM

visatorro wrote: »

Lad around here reckons he's making a fortune if he's getting more than 17 cent. I got this fired at me from non farming type's recently. Fecking genius altogether.

He is producing at that level if he is at zero debt ,working for free ,no wife or kids etc fooling no one only himself

alps · 30-08-2017 09:05PM

mahoney_j wrote: »

He is producing at that level if he is at zero debt ,working for free ,no wife or kids etc fooling no one only himself

Or selling sites.......the site scene is surely on the way back at this stage.....

visatorro · 30-08-2017 09:13PM

mahoney_j wrote: »

He is producing at that level if he is at zero debt ,working for free ,no wife or kids etc fooling no one only himself

I know. Maybe he's finishing the Bullocks!!
Heard greenfield on about 36 which I was glad to hear as it has a reputation for low cost.

Mooooo · 30-08-2017 09:17PM

Henwin wrote: »

As we are relatively new to dairying, 6 years now, we have a lot of loans still to pay off, and the last few years were very tight so few euro counts. The loans shud be cleared by 2020 and then we will be doing fine hopefully.

With the fixed price the way to look at it is work out your costs, and then compare to the fixed price and see if the margin is enough for you. Don't get hung up on being above or below as over time it should average out. It's about protecting from the lows so unfortunately the peaks will be leveled off as well. Start there work out the costs and see if the margin between the costs and the fixed price is ok for ye.

Timmaay · 30-08-2017 09:21PM

alps wrote: »

Or selling sites.......the site scene is surely on the way back at this stage.....

Not really 2bh, Phil Hogan killed off alot of the self built homes with the whole assigned certify mess. Back in the day you could expect 150k for a site, locally here there are supposedly no end of sites still available for 70k etc.

Water John · 30-08-2017 09:28PM

That seems a quite transparent offer from Kerry. You decide largely how much you fix. At least you not buying a pig in a poke.
It's a question of whether, you can carry all the risk your self or whether other issues eg debt, family commitments, moves you to having Kerry share some of the risk.

Good to see DG's Mallow sending out steam again. It must be ready to showcase to the suppliers at the showdays later next month?

GrasstoMilk · 30-08-2017 09:31PM

https://youtu.be/rVj9RtwXWWU

Looks like the greenfield is starting to come into its own. Farm looks well

Waffletraktor · 30-08-2017 09:34PM

mahoney_j wrote: »

Pure guess work guessing where price will be for 3 years.at 31 cent I'd 100%!fix 10/15%!price will go higher and will definitely go lower you'll get over loosing out when price is higher but be damn glad of your fixed portion when milk tanks .lots will disagree with these schemes but I think there vital now to protect a portion of your income .we in this country are primirally commodity producers and they are equally volatile in price

Setting enough to cover fixed costs would be a useful tool and tailor to the year?

Waffletraktor · 30-08-2017 09:38PM

GrasstoMilk wrote: »

https://youtu.be/rVj9RtwXWWU

Looks like the greenfield is starting to come into its own. Farm looks well

Liked the video after, one way of keeping 'em clean.
https://www.youtube.com/watch?v=BBjUixhT_5E

kowtow · 30-08-2017 09:39PM

With fixed price contracts it's sometimes helpful not to regard the "out of the money" price - i.e. 31c with the market at 34c - as a loss, but as a premium for the certainty of the price you did get, which is in fact what it is.

I'd be surprised to see many fixed price contracts for a decent period going out much above 31 or 32c at the moment - remember that the buyer is taking a risk as well and he is out of the money if and when the price drops below the fix at any time during the contract.

Nobody ever got rich trying to predict a market, whatever you might imagine. Traders make money by identifying badly priced risk and buying (or selling) it. So the question you have to ask yourself is "if price goes to 34 or 35c is the 3 or 4c I am losing a cheap price for the certainty I am buying, given my circumstances".

The part time boy · 30-08-2017 09:48PM

Water John wrote: »

Good to see DG's Mallow sending out steam again. It must be ready to showcase to the suppliers at the showdays later next month?

For some reson i have a imange in my head of some radom poster running across a feild to get to a computer as quick as they can to disagree with ya

Water John · 30-08-2017 10:15PM

I'm a very agreeable person!!

Lots of the fixed price schemes have been, cloak and dagger. You make the offer , the processor decides how much or little to take, some having a double up of amounts half ways through, the last Glanbia one, attempting to tie feedstuff purchase into it.
A lot of noise and little clarity.
This Kerry one looks more balanced and transparent.

Waffletraktor · 30-08-2017 10:16PM

The part time boy wrote: »

For some reson i have a imange in my head of some radom poster running across a feild to get to a computer as quick as they can to disagree with ya

Who, Fred?

Water John · 30-08-2017 10:17PM

Fred Fratton is over on another thread, supporting Brexit!!!

Waffletraktor · 30-08-2017 10:21PM

Water John wrote: »

Fred Fratton is over on another thread, supporting Brexit!!!

No.
Your bff Fred.

Water John · 30-08-2017 10:28PM

Well, you know when a fellow writes a local history, the best and true stories cannot be put in the book.
It's the same with Mallow. Let's say, it's been interesting times. Glad for the suppliers that it's working, at €86M declared cost, it would want to be.

alps · 31-08-2017 09:05AM

What would be the response from your contractor be if you asked him to fix the price of 20% of your work for the next 3 years at 9% below current price?

Then move on to the rest of your suppliers...

kowtow · 31-08-2017 09:33AM

alps wrote: »

What would be the response from your contractor be if you asked him to fix the price of 20% of your work for the next 3 years at 9% below current price?

Then move on to the rest of your suppliers...

If prices can only go up, as wages and inputs tend to do, then he would likely laugh at you.

But output prices are not the same.

If there were ten big firms of contractors with subsidized machinery and gangs of labour moving into the district your contractor might be happy that you sign a contract for any of your work for the next 3 years, nine percent or no nine percent!

Water John · 31-08-2017 09:52AM

If fixed price contracts are to be the norm, then this Kerry one seems the most transparent.
One is then haggling about the lock in price.

Don't think it's a mechanism to beat the market, simply stabilising the volatility.

mahoney_j · 31-08-2017 03:03PM

Water John wrote: »

If fixed price contracts are to be the norm, then this Kerry one seems the most transparent.
One is then haggling about the lock in price.

Don't think it's a mechanism to beat the market, simply stabilising the volatility.

The first arrabawn scheme over 3 years is also very fair and transparent to be fair .30.6 vat inc plus solids and no link to purchase inputs etc ,second scheme currently been finalised for next year

Water John · 31-08-2017 07:08PM

Well when the supplier is given the leeway to decide, the extent of the offer, it alters the whole process to a significant degree.
So if the base is, everyone can lock in, say 20%. Then people can choose less or none, without impacting on future fixed schemes.
Stand alone, transparent and offered to all.

wats the craic · 31-08-2017 08:51PM

any idea what good ebi in calf heifers are making at the moment

whelan2 · 31-08-2017 08:57PM

wats the craic wrote: »

any idea what good ebi in calf heifers are making at the moment

Sorry to hijack you but any truth that strathroy milk is heading from the south east to west cork to be processed?

mahoney_j · 31-08-2017 08:58PM

wats the craic wrote: »

any idea what good ebi in calf heifers are making at the moment

If calving next February and in calf to high ebi ai sire 15/1600 plus .would take at the very least that to convince me to offload

wats the craic · 31-08-2017 08:59PM

whelan2 wrote: »

Sorry to hijack you but any truth that strathroy milk is heading from the south east to west cork to be processed?

ya a good bit going to kanturk as far as i know . not sure how many loads a day or week doe .

whelan2 · 31-08-2017 09:03PM

wats the craic wrote: »

ya a good bit going to kanturk as far as i know . not sure how many loads a day or week doe .

Makes sense I suppose instead of hauling it north and back south again

Dairy chit chat II

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