Sunday, October 31, 2010

Price & Production

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How many times have we heard the connection between price and production is the strongest force on earth? Well apparently, that idea only applies to farm milk.

The above graph shows absolutely no connection of price to production of butter. This raises an important question. Since most butter is produced as a commodity by cooperative, how effective is any maximizing returns to producers? Is anybody watching the store?

Saturday, October 30, 2010

Rhyme nor Reason

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Prices have been falling on the CME for Cheddar. What does that mean? You will find plenty of people who point to the cheese stocks.

When Cheddar falls on the CME, farm milk prices fall. So, you would think there would be a consistent relationship between manufacturing milk price and American cheese stocks, which are predominately Cheddar. Think again.

Friday, October 29, 2010

Ag Prices Report

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Today, USDA released its monthly "Agricultural Prices" report and on page 26 the "All Milk Price" as a "percent of parity" is listed at 38%. The point of parity was to keep farm milk price rising, generally, at the inflation rate, so dairy farmers could "keep up" with others.

A while back I posted a graph which projected milk production beyond the elimination of parity. That graph indicated actual milk production increased as prices for milk fell. Nevertheless, many still think that dairy farmers were over producing at the time parity was eliminated.

So, now in the graph above, is the actual data available to decision makers on production. This is not a case where the "truth" lies somewhere in the middle.

Retail prices of food have risen slightly more than inflation.

Those politicians who established parity were well acquainted with the hard times of the depression. That generation knew the result of corporate greed.

Thursday, October 28, 2010

Hard Questions

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In the most recent Market Administrators Bulletin for Federal Order One (the Northeast) some interesting data is presented on page 2 & 3. The data raises a very important question, or maybe two or three.

Without the effect of large farms, there would be no problem with milk farm price. Bureaucratic officialdom has pushed for the above results. Bankers, Universities, and USDA all have pushed for the Darwinian approach. Those in the middle have been the only real benefactors of official policy.

At the same time, farmers are told they need to get together, they are encouraged from nearly every side to think only of number one.

Obviously, there can be no answers to the hard questions without leadership. At this point, officialdom must see the whole thing as a kind of blood sport in which they are only neutral participants. This is not true. Virtually all the blame lies with leadership.

Wednesday, October 27, 2010


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22% of beef Americans eat comes from dairy farms. This is supposed to be the basis for supporting the beef checkoff.

But, America imports a lot of beef,

Tuesday, October 26, 2010

Into Each Life Some Derivatives

CME Group to Launch Rainfall Contracts in Nine U.S. Cities

CHICAGO, Oct. 14 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, announced today that it will begin listing and trading rainfall futures, options on futures and binary options beginning October 31 for trade date November 1. The monthly and seasonal contracts will be based on the CME Rainfall Index and will be available March through October. These contracts will be listed with, and subject to, the rules and regulations of CME.

"We see the impact of weather every day in our lives and we know how it can influence regional and local business decisions – whether to raise prices, divert inventory or result in temporarily closures," said Tim Andriesen, CME Group's Managing Director of Agricultural Commodities and Alternative Investments. "A significant number of industries, from agribusiness to recreation, are reliant on good weather, but also are at the mercy of bad weather. Rainfall contracts, in conjunction with our existing suite of weather products, will allow these businesses to manage the resulting risk."

"CME Group's commitment to expand their product offerings in the weather space has enabled our clients to gain access to financial risk mitigation tools previously only available to large, commercial end-users in the over-the-counter market," said Jeff Hodgson, President of Chicago Weather Brokerage. "The rainfall contracts are a viable hedging tool for large agricultural market participants, as well as smaller industries that are equally affected by weather."

The rainfall contract locations include Chicago O'Hare International Airport, Dallas-Fort Worth International Airport, Des Moines International Airport, Detroit Metro Airport, Jacksonville International Airport, Los Angeles Downtown USC Campus, New York LaGuardia Airport, Portland International Airport and Raleigh/Durham International Airport.

The futures and options on futures contracts enable market participants to manage exposure to rainfall. The binary options enable users to manage the ramifications on businesses or other operations if rainfall is more or less than anticipated. Binary options provide the options holder with a fixed dollar payout upon exercise. If the option expires without being exercised, the holder's losses are limited to the amount paid for the binary option.

CME Group's weather product suite offers trading opportunities related to rainfall, temperature, snowfall, frost and hurricanes. The products are based on a range of weather conditions in more than 47 cities in the United States, Europe, Canada, Australia and Asia, with the hurricane products geared to nine U.S. regions. For more information about CME Group weather products, visit

As the world's leading and most diverse derivatives marketplace, CME Group ( is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (Nasdaq: CME) and its products can be found at

Monday, October 25, 2010

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If you go to you will see the above message. Notice the date - June 30, 2010.

This has to be some sort of record submittable to Ripley's Believe It Or Not for the longest time to fix a glitch in a web site.

It has been long enough.

Sunday, October 24, 2010


The phone rings with unsolicited calls on behalf of one politician or another. The mail box is stuffed with meaningless political propaganda. My one hope, in vain, is to have a slot on the ballot for "none of the above."

According to an average of four polls taken between 9/29 and 10/18, 72.8% of the public disapproves of the performance of congress.

A democracy is totally dependent upon an informed public - a fact quite missing in America. Sad but true, countries get the leaders they deserve.

Change is practically a trademarked term by those with something to sell.

Saturday, October 23, 2010

California ?

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Looking at California's "income over feed costs" suggests yet another race to the bottom is approaching. The graph only covers through August 2010. September corn prices will drive the numbers lower than anything shown on the graph, all things being equal.

I'm sure Freud would have a term for all this. At the moment, this is what passes for normal thinking. Crazy!

Friday, October 22, 2010


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FDIC chair warns of possible US farmland 'bubble'
Mon, Oct 18 2010
* Says U.S. farmland values requires "close monitoring."
* Farmland values 58 percent above 2000 levels
By Carey Gillam
KANSAS CITY, Mo., Oct 18 (Reuters) - U.S. farmland could be the next asset bubble at risk for bursting, a leading banking regulator said on Monday.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., said it was important to monitor U.S. farmland values for signs of instability like the price bubbles in the housing and stock markets that burst with disastrous consequences for many investors.
Farmland values remain 58 percent above their 2000 levels in inflation-adjusted terms. Investors have been snapping up high-quality land in the Midwest where row crops like corn and soybeans are grown as well as orchards for high-priced nuts and berries along the U.S. West Coast.
While commercial and residential real estate prices have fallen sharply, farmland valuations have remained strong during the recession. But Bair said those "positive fundamentals" could change.
"A sharp decline in farmland prices similar to the early 1980s could have a severe adverse impact on the nation's 1,579 farm banks," Bair said in a speech delivered to a risk management group in Baltimore.
"While the credit structure underlying U.S. farmland does not appear to involve excessive leverage or inappropriate loan products, this is a situation that will continue to require close monitoring," she said.
Bair is a member of the newly established Financial Stability Oversight Council made up of the Treasury, the Federal Reserve, the FDIC and other financial regulatory authorities. FSOC held its first meeting on Oct. 1.

Oh no - couldn't happen you say. In 1946 there were a total of 2 bank failures. Today, today there were 6. See:

Is there anyone who is examining the potential this has for the food supply in the U.S.? The political discussion stays focused on fad thinking.

Thursday, October 21, 2010


Markets are supposed to move on information. The latest Fonterra auction (October 19, 2010) results can be found at:

As can be seen overall trade weighted prices were down 2.5% - why?

Dairy Market News on October 14, 2010 said,:

In New Zealand, milk producers are returning to regular operations following adjustments that some farmers made to their operations following the heavy
snowfall on the South Island and wet conditions in most all other regions in recent weeks. These adverse weather conditions, at this time of the season, were stressful to the milking herd and breeding timelines. Some farmers adjusted their milk schedules to once a day to help maintain cow conditioning at this crucial time of the breeding season. Overall milk production is now back on track to steadily build toward season peak levels. Milk handlers are
speculating that this glitch, during the seasonal buildup, may take the bloom out of a higher seasonal peak than projected. Prior to the adverse conditions, milk production was running 1 - 2% ahead of last year, slowed during the inclement weather patterns, but is now once again on the uptick. This weather glitch has negatively impacted some production projections by as much as 2%.

Bloombergs blamed the drop on the latest "Milk Production" report, which came out exactly when the auction started. additionally, where is the product coming from that Fonterra is selling?

Hard to make heads or tails of the auction. Markets are supposed to move on information but, do they?

Wednesday, October 20, 2010

How Many?

The question is, how many farms are in similar situation?

An auction is set for November 17 to sell off 7500 milking cows from the Artesia Dairy southeast of Corcoran. The auction at Overland Stockyards in Hanford also includes rolling stock from the dairy owned by Hans Reitsma - a Dutch immigrant who died at his own hand in late 2008.

Reitsma’s death caused a stir in the close knit central California dairy industry in part because Hans left behind a widow and seven young children.

Family-owned dairy farmers- many with Dutch or Portuguese heritage - shared their neighbor’s pain also because the disastrous and sudden downturn in milk prices called into question all of their survival.

The collapse in dairy prices in 2008 came just as a global financial crisis affected banks.

Like Reitsma most dairymen had borrowed millions to finance their operations and word spread that Reitsma had been pressured by his bank to sell the operation he had built up so successfully over the years. He reportedly left behind two suicide notes - one for his family and another for his banker say several news accounts.

Reitsma’s widow Roxanne -raised from a large Portuguese immigrant family- bravely tried to run the 2330 acre farm on Highway 43 at Rd 136 by herself for months. But then this sad saga got sadder.

A Tulare County court this spring authorized the dairy be placed in receivership after the lender claimed the operation continued to lose value.

The receiver - a kind of court-appointed trustee has been operating the 7500 head dairy since then says Gary Honeycutt who manages the dairy for the receiver JVan Curen.

WARN Notice

In recent weeks the receiver has posted a state WARN notice that the 70 workers at the big Tulare County ranch will be laid off as of November 28. A WARN notice requires employers to give affected employees and other state and local representatives notice 60 days in advance of a plant closing or mass layoff. It triggers help for the affected employees.

The action to sell off the cows is needed to protect the asset says Honeycutt. “The collateral here at the Artesia Dairy has been deteriorating” figures Honeycutt . The sale will not affect a future sale of the property and homestead itself. Honeycutt says the property sale is being handled by area realtors Schuil & Associates but that no sale on the property is pending.

Roxanne and the children no longer live on the ranch having moved this summer.

Today,Roxanne focuses on her children and asks not to be quoted directly in any article. But if you ask her she would tell you she does not agree anyone has the right to sell off their cows and rolling stock.

In the past year Roxanne has been quoted helping bring her husband’s story to light in several national and international news stories highlighting Hans immigration to the US in 1988 in pursuit of the American dream.

According to one Dutch news report his dream was to build a dairy of his own with 700 cows - an unheard of herd size in his native Netherlands.

Twenty years later in 2008 the 37 year-old dairyman had built up two modern dairies in California with 18,000 cows and some 86 employees.

But Tulare County’s multi-decade dairy expansion came to a screeching halt in 2008 with the worldwide recession affecting commodities, banks and real estate.

It came home to roost on the young dairyman’s shoulders.

When he died Hans left behind kids ranging from the age of 2 to 14

The story impressed US Ag Secretary Tom Vilsack who met with Roxanne in March and later in August of last year in a meeting with dairymen set up by Jim Costa, the local congressman. According to one account Vilsack called Roxanne to the front of the room where the meeting was held at the Souza Dairy “and explained how meeting with her and her children touched him.He explained that he recalled a painful memory of a friend lost to suicide.” The account is from central California dairy farmer Barbara Martin who pens A Dairy Goddess’s Blog.

The story also made the news in several national news accounts of rural suicide in the midst of the financial crisis down on the farm.

In at least one news story Roxanne was quoted as blaming the bank for changing the terms of a loan.

$50 Billion Lost

The financial crisis continues says Kings County dairy activist Joaquin Contente.

”In the past few years our dairy industry lost $50 billion in income and equity. Add it up and it’s bigger than the Gulf Coast oil spill.”

Contente says simply figuring what a milk cow sells for today at about $1200 per cow vs $2000 a cow before all this - adds up to $9 billion lost in cows alone.

“Today about 20% of local dairy producers are out of equity” and could face foreclosure from their bank too if there is another downturn in prices he contends.

On the more hopeful side milk prices are much better today than they were in 2008 and Contente says that at least “most of us us can pay our day to day bills.”

There is however the worry that feed prices so important to the industry are suddenly spiking again in late 2010 to $5.80 per bushel. Fed by speculators there was a spike in corn prices to $7.50 a bushel in mid 2008 preceding the collapse of milk prices down to$10 per cwt in late 2008 from $17 per cwt just few months before.

Just before Christmas of that year Hans Reitsma committed suicide .

Tuesday, October 19, 2010

Roll out the Barrel

Today barrels fell to bring them to where they are "supposed" to be relative to blocks.

Monday, October 18, 2010

Futures Down

Today, for the second straight day, block Cheddar on the CME fell. Today, block were down 2 cents and it was not Jerome - try Ted Jacoby.

What is interesting is the crash in futures. On Friday the November 2010 futures were down $0.55. Toady November futures fell another 7 cents.

Easy pickins'.

Sunday, October 17, 2010


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This week NASS will release quite a bit of data;

No one should see the data as precise. NASS obtains one set of numbers for milk production and the check-off obtains another. The two agencies then go back and forth to obtain numbers they can agree upon. With Cold Storage, the numbers have always had a tendency to be off. Then of course, corrections are made.

Also this week the Federal Reserve will publish the "Beige Book" on business conditions throughout the country. Agriculture is given some space and it will be interesting see what is said about corn.

Saturday, October 16, 2010

Nice House - No Barn

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"The surface of American society is covered with a layer of democratic paint, but from time to time one can see the old aristocratic colours breaking through."
Alexis de Tocqueville 1805 - 59

Friday, October 15, 2010

Blocks Fall

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Block Cheddar fell today on the CME, three cents. The last time blocks fell was on June 28, 2010. Since then, blocks have risen $0.3725. The seller today appears to be Jerome Cheese. Jerome was also the seller on June 28th and since June 29th has not been active on the CME.

I spoke with someone today who said cheese is too high - there is a lot of cheese in inventory. I then asked if farm milk was too high and the answer was no.

As can be seen in the above graph, the fact that blocks drop for the processors, in no way means consumers will get great deals and use more cheese. If farm milk price drops, processors will just make more cheese from cheap milk. Comparing August 2010 cheese stocks with January 2009, shows a 17% increase in inventory - all produced with cheap milk.

There is no way that wholesale and farm milk price can be tied together and still pretend there is a market.

Thursday, October 14, 2010

NFDM Prices

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The trade data came out today and surprise, surprise exports of NFDM and skim milk powder were up about 25% in August 2010 when compared with August 2009.

A look at the above graph tells anyone why. The California Weighted Average Price (CWAP)is in the basement. Most of the powder produced in this country comes from California and as a result NASS prices are below where they should be.

The argument could be made, although probably with no proof offered, that the members of the co-ops involved in exporting somehow benefit. However, those low California milk powder prices drive down the Class IV price for the entire country. At the moment Class IV is the Class I mover and so California prices are driving down Class I prices throughout the entire country.

By the way, MPC imports were up in August 2010 about 20%, when compared with August 2009. More cheap cheese and more cheap farm milk.

Wednesday, October 13, 2010

People Have To Eat

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The above graph, plus the current price of corn says we are heading for a cliff.

In America, the food system runs on corn. Even dairy is heavily dependent on corn. Although there are some grass based dairies, the larger operation providing the most milk all go heavy on grain, particularly corn.

So what does $6 corn mean? There seems to be little wiggle room. The retailers have no room to raise prices. At the same time the per capita beef is the lowest since 1952. Pork is about the same.

A the production level dairy, including the support business are bleeding badly.

Needless to say, the bulk of the public is in trouble financially. Can most of the public pay more? Can dairy farm margins be less - NO.

Is there any leadership - NO.

Tuesday, October 12, 2010

How Many

How Many Reporters Would Work for the Washington Post for $10.25 an Hour?
Sunday, 10 October 2010 07:33

According to the Washington Post, if the answer is not many, then we need to bring in immigrant reporters. That is exactly the logic it used in a discussion of the fact that most native born American citizens are unwilling to do farmwork for this wage.

Economists would ordinarily say that the lack of a labor supply at a given price suggests that the wage is too low. However, the Post only considers this fundamental economic principle in passing. It is likely that if farmworkers received $60,000 a year, with health care benefits, there would be no shortage of U.S. citizens willing to do this work.

Of course this would raise the price of farm products, but it would be much cheaper to advertise in the Washington Post if its reporters worked for $10.25 an hour. The lower cost of advertising would be passed on in lower prices for groceries, cars and other items advertised in the paper. At least this is what people who believe in economics would say.

Monday, October 11, 2010

Barrel Cheese Down

Today, October 11, 2010 Barrel Cheese slipped a quarter of a cent to close at $1.7350 per pound. No cheese traded hands. The action happened on an offer.

We work aggressively to bring VALUE . . .
Our daily involvement in every aspect of the dairy industry around the world makes us uniquely knowledgeable about the market conditions that will affect your business. Working together, we help manage your costs and maximize your returns through our creative products, marketing, and finance arrangements. Your success ensures our success!

Of course, there has to be some movement in price so as to convey legitimacy.

Sunday, October 10, 2010


"The much anticipated debut for dairy futures trading on the NZX ended its first day without bothering the scorers."

"The new global whole milk powder futures contracts, which range from one to 18 months' duration, attracted several sellers, according to an NZX spokeswoman, but no buyers by the close of business on Friday."

More at link.

Saturday, October 9, 2010

Fluid Milk Sales

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Dairy Market News yesterday published a corrected version of fluid milk sales.

The interesting part is these in organic sales versus conventional milk. One possible explanation is the variation in unemployment rate. Currently the unemployment rate in the bottom 10% of income categories is 30%. For those over $150,000, unemployment is hardly a problem.

Friday, October 8, 2010

IDFA "Study"

There is a new study commissioned by IDFA on supply management. It is available at:

For those wishing to get right to the conclusion - IDFA is not in favor of supply management. I honestly don't know anyone who prefers supply management over a functioning market system but, we have a dysfunctional market system which IDFA constantly defends.

DIAC Papers

There are some papers related to the September 2010 meeting of the Dairy Industry Advisory Committee (DIAC)available at:

I think there will be no surprises from this exercise.

Thursday, October 7, 2010

Where Did It Go?

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Above is a graph covering fluid or beverage milk. We all know what that is. The blow-molded plastic gallon seems to go back to antiquity. There is nothing new, no additional value added.

But, the price of milk in the store seems to go up and up. The Secretary of Agriculture would do some good to have a commission to find what happened to the money in the middle.

The retailers take more because they can. Are they efficient though?

Tuesday, October 5, 2010

Fonterra Auction

Today, October 5, 2010 Fonterra held its latest globalDairyTrade (gDT). This was the 29th such event.

Whole and skim milk powders were slightly lower, while butter milk powder and anhydrous milk fat increased. Taking great liberties with the word "market", comments from New Zealand are suggesting this latest indicates the "market" is balanced.

Monday, October 4, 2010

Bankruptcy Filings Up

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The headline speaks of bankruptcies being up 20%:

However, Chapter 12 filings are up 56% YOY. Most of those are likely from dairy.

Sunday, October 3, 2010


The EU is not interested in having milk protest. At the moment a plan is being discussed.


High Level Group makes 7 recommendations for EU dairy sector
The High Level Group on Milk, set up last October in the wake of last year's dairy crisis, has finalised the report on its deliberations, including recommendations to the Commission on seven issues. These include an invitation to come forward with concrete moves to enhance the use of written contracts in the dairy supply chain and to consider proposals to increase the collective bargaining power of dairy producers.

EU Commissioner for Agriculture and Rural Development Dacian CioloĊŸ stated today: "I welcome the work of the HLG and this report. I will now study it in detail with a view to coming forward with legislative proposals before the end of the year. My main aim is that we consider medium to long term measures which address the lessons learned from last year's crisis aimed at better structuring the sector as a whole."

The recommendations to the Commission from the High Level Group relate to:

*Contractual relations between milk producers and milk processors: Enhancement of formal written contracts, made in advance, to cover deliveries of raw milk (inc. price, volume, timing & duration) – through guidelines or a legislative proposal, maybe made compulsory by the Member State.
*Collective bargaining power of producers: Possible proposal for provision to allow producer organisations constituted by dairy farmers to negotiate jointly their contract terms, including price, with a dairy. Whether permanent or temporary (but sufficiently long), the provision should be subject to review.
*The possible role of interbranch organisations in the dairy sector: Examination of whether any of the current provisions for interprofessional organisations in the fruit & vegetables sector could also be applicable in the dairy sector.
*Transparency in the dairy supply chain: Further elaboration of the European Food Price Monitoring Tool, and a look at the provision of more information (e.g. on volumes of dairy products) by EUROSTAT & national statistics offices.
*Market measures and futures: Consideration of "green box compatible" instruments to reduce income volatility, including possibly facilitating the use of futures markets, in particular via targeted training programmes.
*Marketing standards and origin labelling: Ongoing Commission work on labelling should consider the feasibility of different options for "place of farming" labelling for dairy products and should seek distinct labelling for imitation dairy products.
*Innovation and research: Improvement in communicating existing possibilities for innovation and research within the existing framework of Rural Development and research framework programmes. Stakeholders should define clear research priorities for the dairy sector in order to allow better coordination of national & Community research programmes.
The full 50-page report (with annexes) will be posted shortly at:

Following the difficult market situation for milk last year, the Commissioner established a High Level Expert Group on Milk (HLG) last October with the purpose of discussing mid-term and long-term arrangements for the dairy sector given the expiry of dairy quotas on 1 April 2015 (see IP/09/1420). While respecting the outcome of the Health Check, the HLG was asked to consider regulatory issues which might contribute to stabilizing the market and producers' income and enhance transparency on the market. 10 meetings were held from October 2009 until June 2010. A draft report summarising the outcome of the discussions and with certain recommendations was tabled in May, and this was adopted unanimously today.

Comprising representatives from Member States and chaired by the Director-General for Agriculture & Rural Development Jean-Luc Demarty, the HLG heard oral and written contributions from major European stakeholder groups in the dairy supply chain on the issues. Furthermore, the HLG received valuable contributions from invited academic experts, 3rd country representatives, DG Competition, National Competition Authorities and DG AGRI regarding some specific issues. Finally a major dairy stakeholder Conference was held on 26 March 2010 allowing a larger number of actors in the chain to express their positions.

Saturday, October 2, 2010

Imbalance of Power

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Nearly everyone has become familiar with the concept of boom and bust. For dairy, there is no boom. The trend is not the result of some evil people plotting the destruction of dairy farmers. For the most part, most dairy farmers have supported the very politicians and policies which has brought dairy farming to near collapse.

Unquestioning belief in "supply and demand" determining price price through a "market" magical discovery prevails.

In fact, we have a price derived system - a top down system.

"Government is the problem" was bought hook, line and sinker in the early 80's. Antitrust resources were reduced on Ronald Reagan's first day in office to one eighth of what they had been the day before.

Supermarkets took off, as can be seen in the above graph. Supermarkets really wear the pants in dairy and dictate terms. Processors take those terms and through the CME give the dairy farmers the dregs.

Time is not really on anyone's side.

Friday, October 1, 2010

May 6, 2010 Flash Crash

Today, October 1, 2010 the SEC and the CFTC released a report on the unusual trading event of may 6, 2010. On May 6, 2010 the DOW stock index fell the largest ever in one day. The DOW plunged 700 points in a matter of minutes. Mostly, the DOW recovered but, theories immediately began to evolve. There are some thoughts for dairy regarding trading vulnerabilities.

The report is available at:

The report is titled: FINDINGS REGARDING THE MARKET EVENTS OF MAY 6, 2010 and is 104 pages long.

One company trading on the CME caused the event. Waddell & Reed Financial of Overland Park, Kansas was the company which traded a huge volume of emini futures.

So, why should dairy be concerned? The event could have crashed the NY Stock Exchange and there would still be other exchanges in the world. However, the CME Group is virtually it regarding the pricing of commodities, including farm milk. May 6, 2010 was a "liquidity" crisis. If such an uncertainty were to hit the CME Group, the financial world would have no idea of the price and no alternative for pricing commodities. Global system failure are now "hardwired" into the system which prices dairy farm milk.