By E. W.
Lang
November Class III Milk Futures on the Chicago
Mercantile Exchange hit $19.99 per cwt. for a couple hours on Thursday, then
closed out the week at $19.61 per cwt., still a gain of 33 cents over the five
trading days. November Class IV Milk,
similarly, hit a contract high, then ended out the week at $18.29 per cwt., a
week's gain of 22 cents. The Class III
Milk-Feed Index, however, increased only 15 cents for the week. Milk price was up some and feed price was up
some more, if that makes sense.
Class IV Milk Futures for all of 2022 now average
$18.22. November averages $18,29 as I
just said, and December 2021 is $18.65.
So the next 14 months of Class IV Future prices are in excess of any
similar period of time since the immensely profitable 2014. For Class III Futures, same story, similar
numbers.
All of this is a result of a couple things,
mostly. The USDA Milk Production report
indicated that August and September milk production in the United States was
lower than the market expected. Also,
total dairy cows in the U.S. are 84,000 head fewer than a few months ago.
That kind of thing seldom happens. Can you can imagine what the fewer number of
total cows would be had USDA not subsidized income over feed cost in that
time? Also, imagine what the price of
milk and ground beef would be had a few hundred thousand more dairy cows been
slaughtered when corn was $2 higher and milk was $2 lower. Milk producers would be recovering equity and
beef producers would be selling land to keep their herds, or at least borrowing
to stay in business.
Anyway, that USDA report came out on Wednesday
and there was a lot of milk price movement up on Thursday. Then on Friday the
market retracted some. Also, a dry-milk
plant burned down in Idaho 10 days ago which interrupted some milk and product
deliveries. So there you go.
Butter went up five cents this week. Dry products remained high. Block cheese this
week gained three cents to close at $1.81 per lb. Barrels were up seven cents
at $1.86 per lb. Note here that 500 lb.
Barrels are priced higher than the 40 lb. Blocks by a nickel.
Usually Blocks are higher than Barrels, and some
years ago we would have said this price inversion, or aberration, means
something. We then would have followed with a very complex or over-simplified
market analysis based on sorcery, Old Testament prophesy or some kind of Base-7
Math concept, each of which would resonate to a segment of readers for one
reason or another.
Today, there is a social medium site for every
belief system, and each segment has a way to validate their faith in anything,
fact based or otherwise. This would
apply not just to dairy prices and market economics, but also to politics,
science and culture.