Milk Price- Please read Mod note in post #1

yosemitesam1 · 02-02-2016 02:03PM

kowtow wrote: »

There's no reason to my mind why it couldn't, given the (relatively) liquid contracts available at the CME. There is some element of state quota / reference year I think but that isn't what makes the scheme tick.

The US government have provided mortgage certainty via Fannie Mae and Freddie Mac (occasionally disastrously) - both entities which are a part of the market but were originally facilitated by Govt - for the best part of a century but I don't think anyone would class that as state intervention.

Also given that the scheme covers a margin over feed, with low feed prices, it may not actually be supporting any production at the moment?

According to this its not supporting anything yet
http://www.fsa.usda.gov/programs-and-services/Dairy-MPP/index

kevthegaff · 02-02-2016 04:44PM

http://www.agriland.ie/farming-news/another-drop-in-prices-at-the-latest-global-dairy-trade-auction/ another drop, sorry bout the doom and gloom whelan

Buford T. Justice XIX · 02-02-2016 04:52PM

kevthegaff wrote: »

http://www.agriland.ie/farming-news/another-drop-in-prices-at-the-latest-global-dairy-trade-auction/ another drop, sorry bout the doom and gloom whelan

They had that flagged from the milk futures market late last week. The butter drop was the surprise, though, iirc they expected butter to hold or drop slightly.

RightTurnClyde · 02-02-2016 05:12PM

kevthegaff wrote: »

http://www.agriland.ie/farming-news/another-drop-in-prices-at-the-latest-global-dairy-trade-auction/ another drop, sorry bout the doom and gloom whelan

Jesus, the wheels are really starting to fall off now.

Farmer Ed · 02-02-2016 05:34PM

Mehaffey1 wrote: »

For all I talk about nz, which I'm limited to, I have noticed a lot of Irish focus on how dairying out here is the 'way to be', agriland articles etc.

Think it's a very simple minded way of looking at things. Why focus on doing things the kiwi way when most farmers should be focusing on improving their own systems and improving their efficiencies etc?

The only thing really to take out of Nz farming as a whole is the grass management obsession but even nz had been moving away from the grass only mindset. If the world milk price average was high would the focus not be on how to feed huge percentages of supplement to power ms production?

I fully agree but some in Ireland long for the day when we have only one or two. Large milk processors also. I doubt if that model is all the sunshine it's made out to be judging by the milk price paid to. Nz farmers. As far as I can see the only advantage large Co ops have is they can spend more on pr in order to make themselves look good.

kowtow · 02-02-2016 05:51PM

Buford T. Justice V wrote: »

They had that flagged from the milk futures market late last week. The butter drop was the surprise, though, iirc they expected butter to hold or drop slightly.

Ironically it might be a butter drop which is needed to pull the carpet out from underneath US production in the near term. Certainly there has been something of a butterfat bubble going on.

In essence, though, this is all short term price speculation. As others point out, whether any farm can survive it depends on decisions inside the gate.

What we should be looking at is the change in the overall supply landscape -- as long as oil & soft commodity prices are in a new low phase the feed ratio / margin over feed means that the trigger price at which intensively fed competitors will take cows out of production is lower than it was between 2007-2014 when nuts were dear. In other words we might not be quite as competitive as we would like to think.

Is 600,000 litres per man from grass in fact economically sustainable in a low price commodity era, if that is what settles in for the long term. If it is - what price should land be?, and if it isn't - where are those premium products going to come from to save our bacon?

Dawggone · 02-02-2016 07:14PM

kowtow wrote: »

What we should be looking at is the change in the overall supply landscape -- as long as oil & soft commodity prices are in a new low phase the feed ratio / margin over feed means that the trigger price at which intensively fed competitors will take cows out of production is lower than it was between 2007-2014 when nuts were dear. In other words we might not be quite as competitive as we would like to think.

Is 600,000 litres per man from grass in fact economically sustainable in a low price commodity era, if that is what settles in for the long term. If it is - what price should land be?, and if it isn't - where are those premium products going to come from to save our bacon?

Bang on the money Kowtow
In the low commodity price cycles the non grass based milk producers have a distinct edge. This in turn lowers the overall base price bottom line for all. Does anybody remember back to the 80s when there were articles in the IFJ wondering how we could compete with french farmers that had maize and soya at tiny prices?

I'm trying to move some wheat atm and the best I can get is €131/ton for next July. The world is awash with cheap grains and stocks are huge....by my rough estimates €131 for wheat equates to about 18cpl for milk. I'm sorry that I planted any winter cereals.

What price is conacre this year? Now is usually the main trade on conacre for the year.

Buford T. Justice XIX · 02-02-2016 07:18PM

kowtow wrote: »

Ironically it might be a butter drop which is needed to pull the carpet out from underneath US production in the near term. Certainly there has been something of a butterfat bubble going on.

In essence, though, this is all short term price speculation. As others point out, whether any farm can survive it depends on decisions inside the gate.

What we should be looking at is the change in the overall supply landscape -- as long as oil & soft commodity prices are in a new low phase the feed ratio / margin over feed means that the trigger price at which intensively fed competitors will take cows out of production is lower than it was between 2007-2014 when nuts were dear. In other words we might not be quite as competitive as we would like to think.

Is 600,000 litres per man from grass in fact economically sustainable in a low price commodity era, if that is what settles in for the long term. If it is - what price should land be?, and if it isn't - where are those premium products going to come from to save our bacon?

There's the rub, though. In the PLC model, the premium return goes to shareholders rather than suppliers so suppliers only get a reducing % of the premium return as time goes on and shareholdings are removed from inside the farm gate.

And bar Carbery, there isn't any great sign of value added coming from the co-op side either.

Unless there is a fundamental change in the whole structure and attitude of the processing sector, nothing is going to change in the medium term.

Yeah, Whelan2, I'm not going to cheer you up either:(

alps · 02-02-2016 07:27PM

kevthegaff wrote: »

http://www.agriland.ie/farming-news/another-drop-in-prices-at-the-latest-global-dairy-trade-auction/ another drop, sorry bout the doom and gloom whelan

Easy guys.....European spot orices up..butter ip 5% in the US....This uncomfortable GTD doesn't control our world.

Imagine a beef world that was controlled by prices at Bandon mart each Monday, and by lunch time Mon the world would be shaken with by she revaltions on the press and the Media..."Bandon down 7%"
Farmers, processors., bankers the world ov er loosing the run of themselves with worry...where will it ever stop. Beef is phuqed..........

keep going · 02-02-2016 07:50PM

Just out of curiosty where in the world is the cheapest place to produce milk at the moment

Dawggone · 02-02-2016 08:07PM

keep going wrote: »

Just out of curiosty where in the world is the cheapest place to produce milk at the moment

??
Éire. Where else?

alps · 02-02-2016 08:08PM

keep going wrote: »

Just out of curiosty where in the world is the cheapest place to produce milk at the moment

Family outfit....no employees...France

Othewise US...

Dawggone · 02-02-2016 08:11PM

alps wrote: »

Family outfit....no employees...France

Othewise US...

Ah no!
I deliberately posted Éire because the northern lads are stoned on zero grazers and diet feeders.

alps · 02-02-2016 08:29PM

Dawggone wrote: »

Ah no!
I deliberately posted Éire because the northern lads are stoned on zero grazers and diet feeders.

Reckon there a fair bit of heavy metal disease in France Dawgone much of it driven by a lack of appreciation towards the taxman...and employment laws that we could not deal with here in Ireland....but a well run family show in France can throw out some money. ...

The US I referred to was of course Mr Trump's United States.....that's where you get cheap labour....and Trump won't say no to yhat...

Land prices at 10k per acre I'm NZ would now rule that out as one of the cheap options, and we haven't been that for a while, so my reckoning is US...cheap inputs, cheap labour, ball of cows on a dirt patch and a milking parlour that can stay going 24/7.....

Dawggone · 02-02-2016 08:47PM

alps wrote: »

Reckon there a fair bit of heavy metal disease in France Dawgone much of it driven by a lack of appreciation towards the taxman...and employment laws that we could not deal with here in Ireland....but a well run family show in France can throw out some money. ...

The US I referred to was of course Mr Trump's United States.....that's where you get cheap labour....and Trump won't say no to yhat...

Land prices at 10k per acre I'm NZ would now rule that out as one of the cheap options, and we haven't been that for a while, so my reckoning is US...cheap inputs, cheap labour, ball of cows on a dirt patch and a milking parlour that can stay going 24/7.....

You mightn't be far off the mark. I have no knowledge of the U.S. but the sizeable french family farms are doing fine...only for the madness of paying 46cpl for production rights. Lots of small herds exiting dairy now, only to be snapped up by the larger farmers.
There may not be many small dairy herds left in the business when this spell is over. Let's face it 46cpl is a nice touch. I'd take it!

Farmer Ed · 02-02-2016 11:10PM

We were told all the elaborate investment by some of the Irish processors was for high end value added powders for baby foods and such.The proof of the pudding is the eating. Looks like farmers were told a few porkies.

http://www.agriland.ie/farming-news/irish-production-of-skimmed-milk-powder-up-146-in-three-years/

keep going · 03-02-2016 12:21AM

alps wrote: »

Family outfit....no employees...France

Othewise US...

Would a well run irish family farm milking say 100 cows with little borrowings would be fairly competitive with anywhere in the world

Bass Reeves · 03-02-2016 12:32AM

Hard to see oil staying as cheap as it is at present. Already Russian and Saudi Arabia are starting to talk. No oil country can sustain present cheap oil prices. What is underpinning the US milk price at present is not only cheap oil but a strong beef price. HO bull calves are making 350 dollars a pop at 3-4 weeks of age. Big difference compared to when they were shooting them a few years ago. That is worth 3c/litre to them. That is before you factor in extra cull value. The beef value may be worth 5-6c/L compare historical averages.

If beef price falls in the US late this year as expected and oil rises in price the whole dynamic changes. Cheap labour is there only advantage then.

Mehaffey1 · 03-02-2016 02:42AM

How are you converting calf and cull values into cents/litre?

Meat value divide by average cow production per year = cents per litre?

freedominacup · 03-02-2016 07:37AM

Dawggone wrote: »

You mightn't be far off the mark. I have no knowledge of the U.S. but the sizeable french family farms are doing fine...only for the madness of paying 46cpl for production rights. Lots of small herds exiting dairy now, only to be snapped up by the larger farmers.
There may not be many small dairy herds left in the business when this spell is over. Let's face it 46cpl is a nice touch. I'd take it!

When your processor was trying to talk you into more dairy production was this 46c/l in the mix? If it was no wonder you weren't biting. But of a disconnect between good young cows in milk @ €700 and milk production rights @ 46c/l.

Bass Reeves · 03-02-2016 08:28AM

Mehaffey1 wrote: »

How are you converting calf and cull values into cents/litre?

Meat value divide by average cow production per year = cents per litre?

divide 350 by 8000(litres of milk) that gives you 4.375. I am allowing them 1.375c/L or 110 euro to rear the calf and about 160 euro as extra cull value.

Dawggone · 03-02-2016 08:51AM

freedominacup wrote: »

When your processor was trying to talk you into more dairy production was this 46c/l in the mix? If it was no wonder you weren't biting. But of a disconnect between good young cows in milk @ €700 and milk production rights @ 46c/l.

The production rights are only an issue in the large dairy area in the north. Last April they started trading at 4c but big demand has driven the trade to 46c. Mad?

yosemitesam1 · 03-02-2016 08:58AM

Bass Reeves wrote: »

Hard to see oil staying as cheap as it is at present. Already Russian and Saudi Arabia are starting to talk. No oil country can sustain present cheap oil prices. What is underpinning the US milk price at present is not only cheap oil but a strong beef price. HO bull calves are making 350 dollars a pop at 3-4 weeks of age. Big difference compared to when they were shooting them a few years ago. That is worth 3c/litre to them. That is before you factor in extra cull value. The beef value may be worth 5-6c/L compare historical averages.

If beef price falls in the US late this year as expected and oil rises in price the whole dynamic changes. Cheap labour is there only advantage then.

Its hard to see oil going up much really, everyone seems to want a decent market share and a single producer like Saudi doesn't have as much control as they did one time, I think oils role in low grain prices is overstated there's a lot more acres cropped and more farmers have access to inputs than ever before.

keep going · 03-02-2016 10:24AM

Just when I was getting a bit fed up with boards a thead like this comes along.there is tendency for people to take any given position as a long term given but it is only really for that day.look at how sentiment to sterling has changed in 6 months and while it took a little longer look at the amazing turnaround in property prices in ireland.you would have been a plucky boy to go saying that in a pub a few years ago.so regards oil and grain prices at the minute they are unstainable at current levels so they have to rise and once the world gets a handle on china it will also help too even if china dosent return to previous growth levels.but heres the tricky one , when and how should you postion yourself

RightTurnClyde · 03-02-2016 11:08AM

keep going wrote: »

Just when I was getting a bit fed up with boards a thead like this comes along.there is tendency for people to take any given position as a long term given but it is only really for that day.look at how sentiment to sterling has changed in 6 months and while it took a little longer look at the amazing turnaround in property prices in ireland.you would have been a plucky boy to go saying that in a pub a few years ago.so regards oil and grain prices at the minute they are unstainable at current levels so they have to rise and once the world gets a handle on china it will also help too even if china dosent return to previous growth levels.but heres the tricky one , when and how should you postion yourself

You're not far off the mark, but with milk pricing you can get a good indication ( indication, that's all) of things to come in 6 or 12 month blocks. The quantity and success of cereal sowing across Europe and the US. That will indicate the first 6 months and the size of the harvest itself will indicate the following 6-12 months. Oil price helps with predictions but I find that gives more of an indication of cereal prices which then follows to milk price,whereas cereal quantity and price gives a more direct milk price indication.
That's why the minister for ag and other people coming out last year saying milk price was going to improve in '16 was pie in the sky stuff. For the moment there is a surplus of cheap grain there till the next harvest at least so there's no reason why milk prices should rise for most of '16. If we pass September '16 and the harvest looks good, you can guess what the milk price for '17 is going to look like.

kowtow · 03-02-2016 11:33AM

keep going wrote: »

Just when I was getting a bit fed up with boards a thead like this comes along.there is tendency for people to take any given position as a long term given but it is only really for that day.

Just as we all talk our own book ("when you have a hammer in your hand, everything looks like a nail")... we also muddle time-frames to suit our purpose at the time.

In extremis what worries me is that the entire cheap grass / powder / NZ (call it what you will) model might be something that depends upon the unusual market conditions of 2007-14 for it's very viability. It's clear from the charts that NZ prices before 2004 were a different beast, I'd be interested to hear an NZ perspective on this as well. Did we actually base a long term investment plan on a short term market movement?

Thankfully - in the longer term - we are probably not too far down that road to take stock, and for the short term if this early episode of pain teaches all of us to farm with a sharper pencil it will do us no harm in the great scheme of things.

Brown Podzol · 03-02-2016 12:14PM

The US I referred to was of course Mr Trump's United States.....that's where you get cheap labour....and Trump won't say no to yhat...

I thought he was building a wall to keep them out, or was that to keep them in.:D

Buford T. Justice XIX · 03-02-2016 12:34PM

Brown Podzol wrote: »

The US I referred to was of course Mr Trump's United States.....that's where you get cheap labour....and Trump won't say no to yhat...

I thought he was building a wall to keep them out, or was that to keep them in.

Depends on which way the wind is blowing, I'd say.

Could you imaging a world where Trump was president of the US?

It might be time to convert a slurry tank to a fallout shelter.

alps · 03-02-2016 02:54PM

Brown Podzol wrote: »

The US I referred to was of course Mr Trump's United States.....that's where you get cheap labour....and Trump won't say no to yhat...

I thought he was building a wall to keep them out, or was that to keep them in.:D

He's building a wall to get votes......He wasn't too fussy about foreign wives, nor will he be too fussy about foreign workers.
Mr Trump minds his wallet and his mickey......doesn't mind his mouth too much though....

keep going · 03-02-2016 02:55PM

alps wrote: »

He's building a wall to get votes......He wasn't too fussy about foreign wives, nor will he be too fussy about foreign workers.
Mr Trump minds his wallet and his mickey......doesn't mind his mouth too much though....

Id say he isnt too fussy with his mickey either

Milk Price- Please read Mod note in post #1

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