Milk Price III

jack o shea

10% is not worth a fcuk tho is it lads, they are riding us sideways in the lower price years why don't they offer us 30 cent for the full years supply?

Jacquesdalad

Has anyone tried to fix feed and fert prices for 18mth to 3yrs?
Your local friendly merchant should be amenable.
Fix 10% of feed and fert for duration of contract?

alps

Sillycave wrote: »

Will feed and fert follow milk price and if so which follows which!!!
Probably does as milk price has risen so too has fert, will feed follow soon?
What would happen if feed and fert rose but milk price dropped?
Aside from that 30.6c per litre is a hell of alot better that the 22c per litre last year and it should provide some little bit of insulation should prices fall

Milk price follows the other 2 in a roundabout kinda way, which leads to a lag in the way up and also on the way down. This lag is the opportunity for the dairy farmer to make higher returns than normal.
Simple....buy as much if your inputs as possible before they increase in price...
And........sell as much of your products as possible before they decrease in price..

First one is simple enough, but need finance facilities, and foreword buying to complete. The second one we can only partially offset, and that is by these fixed milk price schemes, and assessing the correct time to partake. The US lads are masters at this and have systems you should adhere to to make it work.

Milk price is determined by supply and demand. When feed prices are low, more milk comes on stream, increasing output and lowering milk price. When feed prices are high, less marginal milk is produced, and after a time lag, price begins to recover.

Fertiliser prices are linked to energy costs, and this has an effect on milk demand, as oil producing nations need oil revenue to be able to purchase product, that which is often the marginal production.

So for a high milk price we need...high oil prices, to increase buying power of 3rd world nations, and high cereal prices to dampen world production of milk.

We may also score better in this country if the milk price might rise to around 35c, enabling Irish family farms to make a profit, but not insentivising a lift in milk production worldwide.

However, as we currently get 30c/l, some of our European competitors are now paying 34c with top ups, so when we get to 35c, maybe the competition will be on 40c and cereals on the floor, they will produce like he'll....

Keepgrowing

alps wrote: »

Milk price follows the other 2 in a roundabout kinda way, which leads to a lag in the way up and also on the way down. This lag is the opportunity for the dairy farmer to make higher returns than normal.
Simple....buy as much if your inputs as possible before they increase in price...
And........sell as much of your products as possible before they decrease in price..

First one is simple enough, but need finance facilities, and foreword buying to complete. The second one we can only partially offset, and that is by these fixed milk price schemes, and assessing the correct time to partake. The US lads are masters at this and have systems you should adhere to to make it work.

Milk price is determined by supply and demand. When feed prices are low, more milk comes on stream, increasing output and lowering milk price. When feed prices are high, less marginal milk is produced, and after a time lag, price begins to recover.

Fertiliser prices are linked to energy costs, and this has an effect on milk demand, as oil producing nations need oil revenue to be able to purchase product, that which is often the marginal production.

So for a high milk price we need...high oil prices, to increase buying power of 3rd world nations, and high cereal prices to dampen world production of milk.

We may also score better in this country if the milk price might rise to around 35c, enabling Irish family farms to make a profit, but not insentivising a lift in milk production worldwide.

However, as we currently get 30c/l, some of our European competitors are now paying 34c with top ups, so when we get to 35c, maybe the competition will be on 40c and cereals on the floor, they will produce like he'll....

Great post.

That's why we're taking s chunk of the latest offerings from GII. It's not for today's price and for a portion of our milk as we want to be in a position to put in a larger volume if/when price rises.

kowtow

alps wrote: »

Milk price is determined by supply and demand. When feed prices are low, more milk comes on stream, increasing output and lowering milk price. When feed prices are high, less marginal milk is produced, and after a time lag, price begins to recover.

Fertiliser prices are linked to energy costs, and this has an effect on milk demand, as oil producing nations need oil revenue to be able to purchase product, that which is often the marginal production.

So for a high milk price we need...high oil prices, to increase buying power of 3rd world nations, and high cereal prices to dampen world production of milk.

+100 fantastic summary of milk, particularly marginal milk there.

All of the above are ways in which oil & other commodities are interlinked, but just to complicate things there is no objective cause and effect between milk & oil and most other commodities.. even if over time the two tend to be correlated. Off the top of my head the increase in cereal prices tends to pull milk up as people switch protein sources, and vice versa, but there are plenty more.

The relative strength of the dollar has an important effect as well.

I'm a bit surprised at the speed of the rebound in oil, and I wonder will we see quite a bit of volatility in both oil and the $ in the coming months. I suspect also that, barring weather events, there is still a lot of underused capacity in milk production worldwide.

If we are very lucky those factors might conspire to keep milk, like goldilocks soup, not too hot and not too cold. But they might not.

But if anything times are more febrile even than last year - neither inflation nor interest rates are going to stay down indefinitely. Given that both of those have major implications for input prices and, further out, for land prices the big challenge this year is going to be banking profits for the next downturn rather than using them to fund expansion. Very sharp pencils required.

Sillycave

alps wrote: »

Milk price follows the other 2 in a roundabout kinda way, which leads to a lag in the way up and also on the way down. This lag is the opportunity for the dairy farmer to make higher returns than normal.
Simple....buy as much if your inputs as possible before they increase in price...
And........sell as much of your products as possible before they decrease in price..

First one is simple enough, but need finance facilities, and foreword buying to complete. The second one we can only partially offset, and that is by these fixed milk price schemes, and assessing the correct time to partake. The US lads are masters at this and have systems you should adhere to to make it work.

Milk price is determined by supply and demand. When feed prices are low, more milk comes on stream, increasing output and lowering milk price. When feed prices are high, less marginal milk is produced, and after a time lag, price begins to recover.

Fertiliser prices are linked to energy costs, and this has an effect on milk demand, as oil producing nations need oil revenue to be able to purchase product, that which is often the marginal production.

So for a high milk price we need...high oil prices, to increase buying power of 3rd world nations, and high cereal prices to dampen world production of milk.

We may also score better in this country if the milk price might rise to around 35c, enabling Irish family farms to make a profit, but not insentivising a lift in milk production worldwide.

However, as we currently get 30c/l, some of our European competitors are now paying 34c with top ups, so when we get to 35c, maybe the competition will be on 40c and cereals on the floor, they will produce like he'll....

Super post, well worth printing

whelan2

http://www.agriland.ie/farming-news/prices-climb-1-3-at-latest-global-dairy-trade-auction/

Buford T. Justice XIX

All bids rejected for the latest round of EU skim tenders.

http://www.independent.ie/business/farming/dairy/eu-milk-powder-stocks-fail-to-sell-again-as-commission-rejects-all-bids-35437122.html

This is starting to look like it's going to be a problem to shift it unless the GDT prices get a dramatic lift soon.

Fixture

Buford T. Justice V wrote: »

All bids rejected for the latest round of EU skim tenders.

http://www.independent.ie/business/farming/dairy/eu-milk-powder-stocks-fail-to-sell-again-as-commission-rejects-all-bids-35437122.html

This is starting to look like it's going to be a problem to shift it unless the GDT prices get a dramatic lift soon.

Always the downside of intervention is that it overhangs the market until stocks are cleared. But good to see they're holding the line on price

Morris Moss

Anybody on here sign up to Glanbia's fixed price scheme? Milk manager rang today and asked did I want to put more milk in which I thought was odd, was thinking maybe not many are signed up.

pedigree 6

Morris Moss wrote: »

Anybody on here sign up to Glanbia's fixed price scheme? Milk manager rang today and asked did I want to put more milk in which I thought was odd, was thinking maybe not many are signed up.

At least you have a Milk manager.
And yes.

Morris Moss

pedigree 6 wrote: »

At least you have a Milk manager.
And yes.

He's not normally someone ya want to see ringing ha, happy enough he did though put a bit more in myself, although it probably doesn't matter as it's unlikely I'll get much.

pedigree 6

Morris Moss wrote: »

He's not normally someone ya want to see ringing ha, happy enough he did though put a bit more in myself, although it probably doesn't matter as it's unlikely I'll get much.

Ah you never know.
It's hard to know how these things are worked out.
You must have stuck the 50 Euro note in with in the application.;)

Fixture

pedigree 6 wrote: »

Ah you never know.
It's hard to know how these things are worked out.
You must have stuck the 50 Euro note in with in the application.;)

Hope you said nice things about them in the survey!

stanflt

Morris Moss wrote: »

Anybody on here sign up to Glanbia's fixed price scheme? Milk manager rang today and asked did I want to put more milk in which I thought was odd, was thinking maybe not many are signed up.

Put 120k into both 8 and 9
Milk manager reckons I'll be lucky to get 10k in each

whelan2

See in the journal we got a new Glanbia board member in our area.

Keepgrowing

whelan2 wrote: »

See in the journal we got a new Glanbia board member in our area.

Was that unexpected?

whelan2

Keepgrowing wrote: »

Was that unexpected?

Well I was surprised to read it but change is good -I hope

whelan2

Glanbia January milk price up 1 cpl to 31cpl

GrasstoMilk

whelan2 wrote: »

Glanbia January milk price up 1 cpl to 31cpl

Glanbia increases January milk price
http://farmersjournal.ie/glanbia-increases-january-milk-price-255306

IFJ got it wrong?

mf240

GrasstoMilk wrote: »

Glanbia increases January milk price
http://farmersjournal.ie/glanbia-increases-january-milk-price-255306

IFJ got it wrong?

That's excluding vat.

It's moving in the right direction anyway

whelan2

mf240 wrote: »

That's excluding vat.

It's moving in the right direction anyway

Would it not be easier to publish all the prices all inclusive of vat ?

CallofGuti

whelan2 wrote: »

Would it not be easier to publish all the prices all inclusive of vat ?

It would definitely but coops don't actually pay the vat is my Uncle's theory. He says the vat inclusive price makes the coop look better!!! I'm not sure.

Buford T. Justice XIX

Kerry rise January milk price by 2c, I think but am confused about the bloody vat rate.

http://www.farmersjournal.ie/kerry-sets-january-milk-price-255827

Fixture

Buford T. Justice V wrote: »

Kerry rise January milk price by 2c, I think but am confused about the bloody vat rate.

http://www.farmersjournal.ie/kerry-sets-january-milk-price-255827

VAT rebate (paid by State) increased from 5.2 to 5.4% from 1 Jan. So if a processor holds their VAT inclusive price this month, then its effectively a reduction in what they are paying for milk.

mahoney_j

Arrabawn up 1 cent to 31.75 vat inc year is looking good

whelan2

Glanbia milk statements are up on line and payments are in bank account

wats the craic

strathroy price is 32.674 for jan

Buford T. Justice XIX

wats the craic wrote: »

strathroy price is 32.674 for jan

That's including vat, isn't it?

The journal needs a good kick in the unmentionables for starting this milk price and add vat when the vast majority of farmers talk of vat inclusive price:mad:

Mooooo

Dairygold is 31 incl vat

wats the craic

Buford T. Justice V wrote: »

That's including vat, isn't it?

The journal needs a good kick in the unmentionables for starting this milk price and add vat when the vast majority of farmers talk of vat inclusive price:mad:

yes that includes vat .

mahoney_j

Returned my arrabawn fixed schem application today to fix 10% of 2016 supply with option to fix another 10%

Keepgrowing

mahoney_j wrote: »

Returned my arrabawn fixed schem application today to fix 10% of 2016 supply with option to fix another 10%

MJ, is there a link to input prices?

mahoney_j

Keepgrowing wrote: »

MJ, is there a link to input prices?

None 3 years from March this year and for 8 calendar months from March to October yearly

alps

mahoney_j wrote: »

Returned my arrabawn fixed schem application today to fix 10% of 2016 supply with option to fix another 10%

Big call MJ......definitive, while the rest of us dither..

Well done.

kevthegaff

Mine is in the bin jerry :-)

Mooooo

Left off here as well. Have some fixed till August if I had joined this one 25% would be fixed below price at the minute and hopefully we will be above it till then anyway. If it doesn't rise much over the year is be wondering would it fall.much the following year. I dunno, maybe chancing it

mahoney_j

kevthegaff wrote: »

Mine is in the bin jerry :-)

Naghhh I hear you applied to fix 30% Kev !!!!!

mahoney_j

alps wrote: »

Big call MJ......definitive, while the rest of us dither..

Well done.

Just looking long term and I've long been a supporter of having a fixed scheme .ill loose this year that's a certain but in 2018 or 19 it could be a saviour .its a gamble but one I'm willing to take for the security it brings .a lot around here very much on fence with an eye on just this years milk price ,only my opinion but I think it's very short sighted .with quotas.now long gone milk is a commodity and like them all will be volatile .i see fixing a portion as like insurance

Water John

For any one who hasn't the resources to self insure, a fixed price that you can live with, that is straightforward and not convoluted, is a good idea.
Don't think you in that bracket, mahoney, but if it makes you content, go for it.

Buford T. Justice XIX

kevthegaff wrote: »

Mine is in the bin filed in the appropriate place jerry :-)

I fixed that for you, Kev:P

Farmer Ed

I'm afraid we will have to agree to disagree on this one. But surely the very principle of a Co Op is that everyone should be paid the same way for their milk? So in effect what fixed price schemes are doing is putting farmers betting against each other. If milk price goes up then the guy on the fixed price will be getting less so there will be more money to share amongst the people who didnt fix. If the milk price falls the Co Op will have to honor the fixed price, so there will be less money to pay for the milk that wasn't fixed. Either way the Co Op should only be able to pay the same net amount for their total pool of milk. My view is that these schemes are just an exercise in robbing Peter to pay Paul and make it even more difficult and complex for farmers to understand what the true price they are actually being paid is. They will not put one extra cent on average into farmers pockets, what they will do is make it a little less certain as to whose pockets the price paid for milk will end up in.
If I want to gamble I would prefer to stick with Paddy Power, however whether I like it or not the future price for my milk will now be influenced by a bet with my fellow Co Op suppliers. I don't welcome this. A saving scheme when times are good would have been far more transparent than this casino approach.

mahoney_j

Farmer Ed wrote: »

I'm afraid we will have to agree to disagree on this one. But surely the very principle of a Co Op is that everyone should be paid the same way for their milk? So in effect what fixed price schemes are doing is putting farmers betting against each other. If milk price goes up then the guy on the fixed price will be getting less so there will be more money to share amongst the people who didnt fix. If the milk price falls the Co Op will have to honor the fixed price, so there will be less money to pay for the milk that wasn't fixed. Either way the Co Op should only be able to pay the same net amount for their total pool of milk. My view is that these schemes are just an exercise in robbing Peter to pay Paul and make it even more difficult and complex for farmers to understand what the true price they are actually being paid is. They will not put one extra cent on average into farmers pockets, what they will do is make it a little less certain as to whose pockets the price paid for milk will end up in.
If I want to gamble I would prefer to stick with Paddy Power, however whether I like it or not the future price for my milk will now be influenced by a bet with my fellow Co Op suppliers. I don't welcome this. A saving scheme when times are good would have been far more transparent than this casino approach.

Ed your off on a rant again and missing whole point of fixed schemes as well as providing some security in price for your milk suppky

Farmer Ed

mahoney_j wrote: »

Ed your off on a rant again and missing whole point of fixed schemes as well as providing some security in price for your milk suppky

As I said we will have to agree to disagree on this. But if you think about this logically, you can't take away from the fact that this involves farmers betting against each other. The value the Coop can make out of our milk will not be changed. Who reaps the reward will.

Fixture

Farmer Ed wrote: »

As I said we will have to agree to disagree on this. But if you think about this logically, you can't take away from the fact that this involves farmers betting against each other. The value the Coop can make out of our milk will not be changed. Who reaps the reward will.

I think you may not fully understand how the Schemes work. For example Ornua/Dairy Board commit to a price for kerry gold butter or cheese for a year. Retailer in Germany signs up to the price for 12 months. Irish Processor converts it to a cpl price. It's a portion of my co op's product mix. I can take that price or leave it. Regardless of what happens Open market, my milk for Kerrygold Germany or wherever is staying at that fixed price. Where's Peter being robbed to pay me (Paul)?

Last few years we've won big on fixed price. We lost a bit for a few years before that. I reckon that over 10 years we'll get the average price, no more, no less. But it was great to have it in 2016 and it certainly dilivered value to me.

Fixed milk is not about beating the market - it's about managing volatility.

mahoney_j

Farmer Ed wrote: »

As I said we will have to agree to disagree on this. But if you think about this logically, you can't take away from the fact that this involves farmers betting against each other. The value the Coop can make out of our milk will not be changed. Who reaps the reward will.

I'm certainly not betting against other farmers ,I'm sitting down ,trying to asscess where I see milk price over 3 years and trying to hedge some of my milk to protect my income and business from the certain volatility which will occur ,

Farmer Ed

Fixture wrote: »

I think you may not fully understand how the Schemes work. For example Ornua/Dairy Board commit to a price for kerry gold butter or cheese for a year. Retailer in Germany signs up to the price for 12 months. Irish Processor converts it to a cpl price. It's a portion of my co op's product mix. I can take that price or leave it. Regardless of what happens Open market, my milk for Kerrygold Germany or wherever is staying at that fixed price. Where's Peter being robbed to pay me (Paul)?

Last few years we've won big on fixed price. We lost a bit for a few years before that. I reckon that over 10 years we'll get the average price, no more, no less. But it was great to have it in 2016 and it certainly dilivered value to me.

Fixed milk is not about beating the market - it's about managing volatility.

Whether Ornua commit to fix a price with the Co Op or not is a totally separate arrangement. The reality is up until now the money generated by the Co Op (at least in theory) was shared proportionately amongst all suppliers. If the Co Op had fixed with a purchaser then that was reflected proportionately across all milk supply. It was a bet between the Co Op and the purchaser of the end product. That is nothing new. The overall amount of money that the Co Op will have to share among farmers for their milk will not be affected by fixed price schemes for farmers. How this money is shared amongst farmers will be affected. That's what I mean when I compare it to robbing Peter to pay Paul. Beating volatility would be better achieved by putting money aside in good times for the rainy day. Not the same thing. Fixed price schemes will result in winners and losers.

Are you suggesting that somehow milk that is signed up to a fixed price scheme with the farmer is somehow able to generate more income for the Co Op than the milk that is not? Chances are whether fixed price milk or not it will all end up in the same pound of butter or whatever the end product is.

Farmer Ed

mahoney_j wrote: »

I'm certainly not betting against other farmers ,I'm sitting down ,trying to asscess where I see milk price over 3 years and trying to hedge some of my milk to protect my income and business from the certain volatility which will occur ,

Ok so let's think about this. In the coming year the milk you have fixed will most likely be paid for at a lower rate than the milk that is not. The end result will be that the extra profit made by the Co Op by paying you less for that milk will be shared amongst other farmers. Possibly over the next couple of years as milk price falls the money the Co Op will have to pay you for your milk will result in the Co Op being able to pay farmers who have not fixed less for their milk.

So what am I missing here? Call is hedging if you like but there will be winners and losers. That I think we can all agree on. This is a departure from the Co Op ethos of paying everyone the same way.

Water John

Those who don't fix will have a more volatile price than if there was no fixed price for anyone. I don't like it either but a lot of processors are going that way.
So each farmer has to make his/her choice.
Worse still some are convoluting it. Tying it to inputs, etc.

alps

Farmer Ed wrote: »

Ok so let's think about this. In the coming year the milk you have fixed will most likely be paid for at a lower rate than the milk that is not. The end result will be that the extra profit made by the Co Op by paying you less for that milk will be shared amongst other farmers.

Eureka.....

That's the cause of of all the argument, right there....

The coop don't make any extra profit from Mahoney's milk.....10% of Mahoney's milk has been sold for the next 3 years, to a buyer with ornua acting as the intermediary. Arrabawn will be paid , say 37c/l for this milk and will be able to pass this on to Mahoney less the processing cost.....

All the rest of his milk, along with yours, will get sold through the normal channels, as usual...

This scheme is clear cut....no backing against each other...

I sell 30 Bull calves, to the same buyer, every year, for the same price... €130...this price is constant, and it has no effect on the price that I can get for the rest of the calves...the market can be above this or below this, but the fact that I sell a percentage of my calves at a fixed price, has no effect on the price of calves for anyone else...