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Had anyone asked a corn and soybean grower in June what their forecast for fall grain prices were, chances are good that the response would have centered around one word … Lower!
My wife and I were blessed with our fourth daughter last July.
The fact that she is the fourth girl is by itself the source of much advice from customers, friends and family.
Regardless, she adds nicely to our family. As she grows and develops, her personality is becoming more distinguished.
Picture this: A man who lives on an upper floor of an apartment building comes home late at night and starts to undress. He first takes off one shoe and drops it loudly on the floor, waking up the occupants on the floor below. He is struck by the thought of his sleeping neighbors and remembers to be quiet.
To that end, he takes off the other shoe and sets it down carefully and silently. What seems like an eternity passes before his neighbor, who has been lying awake all this time, yells up, “Enough already! Drop the other shoe!”
It is a classic Hollywood scene. A soldier is caught in crossfire, trying to determine the best way out of his predicament. The soldier knows that sitting idle will be the death of him if he does not identify a way out. It appears that all angles present some degree of risk, but one must be chosen.
What is next? What’s his plan? Time is of the essence. Creating a plan in such an environment would be stressful, to say the least, but still necessary.
For more than a month, the CME spot cheese trade was able to maintain pricing above $2 per pound. That marks the third-longest stay in the history of the cheese trade above this very closely watched threshold. (See Figure 1.) Much of the thanks goes to a sudden squeeze on available supplies that came in late May following a hold put on 15 million pounds of cheese made in Hilmar’s Texas plant.
Additionally, a very dramatic spring planting season created concerns over available feed supplies in the coming months and year. All of this preceded the seasonal summer heat, which often reduces supplies of milk. Together, these factors presented the cheese market with good cause to move to such levels. It was not alone.
There are many theories as to why milk prices have gone higher since the lows of 2009. Some will argue that the CWT cow kills removed enough production capacity so as to shorten the available milk supply for processors, thus raising their effective bid.
Others will make a case for growing export demand and the broad sweeping interest that foreign buyers have for our products. Some will bring up the crippling weather conditions experienced throughout the Oceania region that shortened their feed availability and ultimately their milk supply.
Like any good story, the dairy market complex has done a good job of keeping viewers in suspense. Here’s the most recent storyline: As farm profitability drops to dismal levels, dairymen view positive returns as a remote possibility, something to hope for in future years instead of this one.
At that moment, the market finds a way to spring back to life and provide producers with enough return to keep both them and their cows in the game. Since the 2009 cycle low, three such incidents have occurred just in the nick of time.
