Today, January 14, 2011 the price of Grade A NFDM rose to $1.4325 per pound. There were an amazing 13 trades this week, where usually there are none. The prior weeks average was $1.2940 per pound.
The answer lies in Brazil with La Nina flooding in which more than 500 have died.
http://edition.cnn.com/2011/WORLD/americas/01/14/brazil.flooding/
The Brazilian government wants an immediate 66 million pounds of NFDM for emergency food relief. New Zealand is hit with another La Nina weather event reducing milk output.
The U.S. manufacturers stocks of NFDM in November were 127.9 million pounds.
This is a big deal. All bets are off. Still time for low ball risk management - if so inclined.
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John, under our current system nfdm price increase will increase protein values in calculating FO blend and individual producer prices. Both DPAC and FFTF is suggesting milk price salvation will be found with a new two class system. Have you our anyone seen models of how butterfat or protein values or minimums will be determined? I suspect the answer is no,how can these organizations be telling us the methods in which these changes become law and no one show us models and calculations of impact to our bottom lines? Milk pricing is a mirror image of banking in the aspect of zero confidence in
ReplyDeletethe perspective system. We must first restore confidence that the system functions? Why can't more farmers see the unknowns of these establishment born proposals as a greater risk then reward? John could you possibly show the profits of publicly traded dairy companies vs the return on investment of the average dairy farm? Would you please start some basics questions that need addressed before we put our future in the hands of a buyer dominated system. Thanks for all you do! The future of so many families and ah so much history are in the hands of a few good people in this industry glad your one of them!
As confusing as the current pricing system is, it is still based on the price of cheese, butter, powder x a formula. The problem lies with finding an accurate price for those commodities. If those prices are left to the whims of Kozakski and crew, LOOK OUT! Imagine a situation where all 3 are determined to be in "surplus", and no value is assessed on them for said month. Milk checks will be $1 or so ppd and the rest will have to come from "insurance"
ReplyDeleteSound far fetched? Just keep sitting on your ass and watch it happen!
The price discovery needs cleaned up and MORE products' prices included, beginning with yogurt.
Rusty
So SOMEONE will sell the 66 million pounds to Fonterra for a rediculously low price and they will sell it to Brazil at world prices?
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