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Thread: Long-term milk price outlook

  1. #1
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    Default Long-term milk price outlook

    Seems like a good place to interject a thread on long-term milk price. It's been 3 years now (2014) since we've had a good price. The futures as of today isn't showing much promise for the remainder of '17 or 2018.

    What say you? Where is this thing headed.

  2. #2
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    Quote Originally Posted by cousinit View Post
    Seems like a good place to interject a thread on long-term milk price. It's been 3 years now (2014) since we've had a good price. The futures as of today isn't showing much promise for the remainder of '17 or 2018.

    What say you? Where is this thing headed.
    I think $14.50/cwt is where you need budget for the next few years.
    With sexed semen and expansions for cash flow, 15 is probably on the high side of average until production comes closer to matching domestic use.

  3. #3
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    I just read an article from Bob Crop saying '17 was looking to be a good year for dairy.

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    Quote Originally Posted by whistle pig View Post
    I just read an article from Bob Crop saying '17 was looking to be a good year for dairy.
    Bob Full of Crap. He was at Platteville when my husband went there back in '72. Nice guy but he grew up on a beef farm so.....
    Last edited by cousinit; 04-05-2017 at 12:15 PM.

  5. #5
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    Ha, yea.... All these guys do is look at the futures. They offer absolutely no insight beyond that anymore.

    My personal opinion is class 3 will hover around 14.75 to 15.75 for the next 18 months.... Maybe longer.

  6. #6
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    Retired neighbor here says he heard that some guys have been making interest-only payments for awhile now.

  7. #7
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    Guess a lot depends if you're a glass half full or glass half empty kinda person, as to where you think the long-term milk price outlook sits. I'm hedging for favourable prices (eventually)...


    Sent from my iPhone using Tapatalk

  8. #8
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    I think my guess is the same as whistle pig. Won't go too high but it won't crash either.

  9. #9
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    Quote Originally Posted by freddobonanza View Post
    Guess a lot depends if you're a glass half full or glass half empty kinda person, as to where you think the long-term milk price outlook sits. I'm hedging for favourable prices (eventually)...


    Sent from my iPhone using Tapatalk
    It has always seemed somewhat easier to predict markets if you aren't financially vested in them, it takes some of the emotion out of it.

    I don't really have a horse in this race, my price is fixed.

  10. #10
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    Quote Originally Posted by whistle pig View Post
    It has always seemed somewhat easier to predict markets if you aren't financially vested in them, it takes some of the emotion out of it.

    I don't really have a horse in this race, my price is fixed.
    I don't either, really. I only have months to go, not years.

    But I do want the BTO's to do well, so as to keep my mailbox money coming in at a good rate

  11. #11

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    I don't see much of a increase in price until the banks start shutting some guys off and the cows start leaving, but chances are it won't happen to the big herds.

    I guess just need to keep struggling along keeping the bills paid. A big guy tell me he was unable to keep up, with his bills and didn't know us small guys were.

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  12. #12
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    Death by a thousand cuts.

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    I am not sure how many farms left can adjust to market conditions. If they are leveraged up to their eyeballs and need a certain $$$ to make payments every month (and the bank has a required number of milking cows required) how can they reduce cow numbers? >33% of the farms I have worked on fell under these restrictions (that I am absolutely sure of). So, even if a open, fat, lazy, high SCC cow is losing $1-$15 in variable costs she still stays on the farm. The number of times I have argued with farm owners that a cow cannot contribute to fixed costs if she can't cover her variable costs is ridiculous.

    Conversely, even at $10 milk there would still be some cows in the barn that could make a good profit (over the year). If a farmer would/could cull hard and ride out the down-cycle milking fewer cows (and not losing money at it) everyone would be a lot happier IMO. Instead, milk goes high, farmers buy on credit because "the good times will never end" and the banker becomes the puppet-master.

    Sorry, rant over.

  14. #14
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    Quote Originally Posted by cows250 View Post
    I am not sure how many farms left can adjust to market conditions. If they are leveraged up to their eyeballs and need a certain $$$ to make payments every month (and the bank has a required number of milking cows required) how can they reduce cow numbers? >33% of the farms I have worked on fell under these restrictions (that I am absolutely sure of). So, even if a open, fat, lazy, high SCC cow is losing $1-$15 in variable costs she still stays on the farm. The number of times I have argued with farm owners that a cow cannot contribute to fixed costs if she can't cover her variable costs is ridiculous.

    Conversely, even at $10 milk there would still be some cows in the barn that could make a good profit (over the year). If a farmer would/could cull hard and ride out the down-cycle milking fewer cows (and not losing money at it) everyone would be a lot happier IMO. Instead, milk goes high, farmers buy on credit because "the good times will never end" and the banker becomes the puppet-master.

    Sorry, rant over.
    We've been leveraged to the eyeballs, or so it felt like to me, and farm credit never managed our cow numbers.

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    It really depends on what is leveraged and the equity situation.
    My cows have always been an income stream to pay for things that build equity. (Land and equipment). When you increase the debt load the cows carry just to create the milk you run into a situation like cows250 described.

    My banker told me just the other day that a lot of guys are currently burning equity, and the guys without any are likely going to be faced with some tough decisions going forward.

  16. #16
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    I guess I should define "debt up to their eyeballs".... <25% equity. At that point, if they are forced to sell, the farm owners may end up with literally nothing.

    While looking for a farm to buy we spent 3 months, and almost finalized buying a different place. The issue was that the lenders couldn't decide who wasn't going to get paid...the vendors and tax man were already SOL. I really like living in Barron, so it worked out for me, but how do bankers and farmers get themselves in that position?

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    Then we were never in debt to our eyeballs. I would never want to get much below 50%. Equity that is.
    Last edited by cousinit; 04-11-2017 at 02:31 PM.

  18. #18
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    Quote Originally Posted by cousinit View Post
    Then we were never in debt to our eyeballs. I would never want to get much below 50%. Equity that is.
    That's why the bank never came to count your cows.

    This is much more common on dairies that don't own any land. The only equity they have is their cows. We all know how cows can lose half their value from one year to the next....all the sudden you could find yourself in that situation without doing anything different.

  19. #19
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    Who would lend money for cows, when you think about it. They are a dime a dozen.

  20. #20
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    That's how lots of people started. In California anyway

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