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igen7
EX91
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United dairy farmers Dec Auction
United dairy farmers Dec Auction
what went wromg ? or is the way things are going?
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7/12/2007, 22:40
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Dairylands
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…
We're probably producing too much milk thus reducing the competition between the buyers.
Looking on the bright side nearly 5p better than last year.
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8/12/2007, 9:08
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moores af
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They had talked about the price taking a 'soft landing' in the spring.
Would you call a drop of 6p/litre from last month a 'soft landing'?
Perhaps alot of big plans for expansion or beef men going into milk etc. might be put on hold for a while to see how things will work out.
Still - like dairylands said, lets look on the bright side.
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8/12/2007, 11:06
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FiringOnAllFour
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Re: …
quote:
dairylands wrote:
Looking on the bright side nearly 5p better than last year.
Do you have any idea what our costs are going to be janfebmar?
There ain't going to be much left behind at 23p.
I have no idea where 40million litres spot came from. Can't wait to hear.
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8/12/2007, 14:03
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Dairylands
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Re: United dairy farmers Dec Auction
"
There ain't going to be much left behind at 23p."
Agreed, but there would have been less at 18p.
The 30s gives the sort of return to do the job right. Personally I am very glad it came when it did as I am currently doing some work on the FNMS which has run on far longer than it should.
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8/12/2007, 20:00
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Dairylands
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"Do you have any idea what our costs are going to be janfebmar? "
Yeah, at 23 I'm still better than last year... but we won't get 23!
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8/12/2007, 20:05
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Dairylands
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United dairy farmers Dec Auction
It would be a very big investment to make on the back of a few months good milk price. Talk's cheap, but the capital required for parlour, bulk tank, building conversions, stock would be a bit of a stumbling block for many. Would it not be a bit safer to reduce the sucklers and plough a bit extra? But then when has reason ever come into it.
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10/12/2007, 20:38
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mootoyou
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Re: United dairy farmers Dec Auction
I'm actually surprised it hasn't worked the other way....
Let's face it, there never has been a better time to sell (especially if your'e in an area with no BT restrictions)
With the price of milking cattle at a high anyone who is either near retirement age with nobody to follow on, or perhaps people who don't own their own farm has to seriously consider whether there will ever be a better time to sell.
The price of fresh calved cows/heifers has doubled compared to this time last year, the extra revenue this would bring to many if considering getting out must be an attractive factor.
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10/12/2007, 20:43
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moore
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Re: United dairy farmers Dec Auction
Will is right about beef men starting into milk, i know of 3 within an 8 mile radius from here who are well into the building work.
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10/12/2007, 21:31
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will maxwell
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Re: United dairy farmers Dec Auction
Exactly Moore, a lot of interest from the beef sector, who have just been told there is no future in beef production from the suckler herd! I tried e-mailing the LMC and UFU to suggest that when it came to beef production "We're not Brazil, we're NORN IRON!" but to no avail, seems they've fallen foul of the old addage about the oldest job as opposed to the oldest proffession! Seems they have just laid down and taken whatever their clients gave them with a huge smile their face!!  and when that client gets it cheaper (and not neccesarily better - full of disease) you let them go on ahead!! Hmmmm
Sorry if my remarks are a little risque!
The last thing we need here is a flood of milk onto a depreciating market, why can't we learn from the Arabs and the Oil market?
I was begining to get excited about the prospects for future milk prices, close to the long awaited point where I could pack up the CAD, and the abuse from clients and contractors, and go pulling tits for a living instead (not at work a the moment!!)
Ah well, here's hoping David Dobbin can get his finger extracted in 2008 after a nice restful Christmas!!
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Farming is the oldest JOB in the world, too many people seem to have it confused with the oldest PROFESSION!
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10/12/2007, 22:03
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moores af
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United dairy farmers Dec Auction
I just heard of a man about 8 miles from where we are who is going into dairying. He is a building contractor who has pedigree cattle and sheep. Apparently, he is well into building a unit for 130 cows with 2 robots.
I dont want to name names but I also hear that a well known breeder of pedigree cattle and sheep from Coleraine is definitely going into dairying.
Another breeder of pedigree livestock mentioned in his column in the Farmers Weekly a few weeks back that he was 'seriously considering' a move to milk production.
Coincidentally all three have pedigree Charolais cattle and Texel sheep!
I understand that as I didnt hear these things first hand there is a possibility that they are not 100% accurate. Apologies if this is the case.
The thing that worries me is that I cant imagine such people starting of with 60 or 80 cows and working up. I would expect them to start of in a big way.
The one thing I dont understand is how the volume of milk sold is more than double that of december last year (44m to 92m litres). The beef men are only at the thinking/building stage so we can't blame them!
Sorry for going on, and if anything I have said is not completely true.
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10/12/2007, 23:10
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FiringOnAllFour
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Re: United dairy farmers Dec Auction
We appear to have a system of forward-auctioning milk, some of which can be thrown back if the price drops. Its called 'option' milk. Therefore, the buyer can take the benefit of forward-buying milk cleverly on a rising market, but can dump it and buy again cheaper when the market falls. That means that half of that milk sold at 33 and 29 pence was thrown back and resold at the start of december for 23p.
I think there will be a lot of very unimpressed farmers.
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11/12/2007, 12:42
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errolston
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United dairy farmers Dec Auction
I would have thought that the buyers would have had to pay to buy the option to buy milk at 33 etc. But obviously if they decide not to take the option to buy at 33p and instead buy at 23p unless the option was seriously expensive the buyers will be better off doing what they appear to have done.
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11/12/2007, 13:23
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Dairylands
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United dairy farmers Dec Auction
They all reneged on their option price including Dale Farm. It wouldn't do for a processor to make a loss.
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11/12/2007, 13:41
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moore
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Re: United dairy farmers Dec Auction
moores af is right about the first pedigree sheep man however the later one has given up the idea.
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11/12/2007, 14:44
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supersub
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Re: United dairy farmers Dec Auction
It went through my mind a few weeks ago that the big boys would be trying to devise a cunning plan to get the milk price back under (their ) control.
This may be that plan
SS
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11/12/2007, 16:40
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FiringOnAllFour
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Re: United dairy farmers Dec Auction
Having had a little time to ponder it, it occurred to me that perhaps the milk traded at 34ppl was never really worth that. Not hard to imagine really. It was probably hiked up by the rising commodities AND a panic fear of supply shortage on the buyers' part. Therefore, an approximate average of the price recieved then, and the price for the quantity returned and resold at 23p might be taken as 27/28ppl, which sounds a bit more sensible.
In the meantime, the next auction won't be good either as the buyers will still be sleeping christmas dinner off when its taking place. And the US has reportedly stepped up production which is countering a falling oceania supply.
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11/12/2007, 20:03
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will maxwell
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Re: United dairy farmers Dec Auction
I took the opportunity to e-mail David Dobbin, and to my surprise got a prompt reply, I'll let you decide...
Dear William
Thank you for your e mail.
In responding to the points in your e mail, I must stress that the EU has moved away from managing the markets – export refunds are zero and intervention support is so low that it no longer offers any real support. A feature of an open seasonal commodity market is increased price volatility which is what we are now seeing.
This has been an exceptional period for dairy markets. Through the summer United’s auction prices increased steeply on the back of very strong commodity returns in powders and a tight milk supply which resulted from the very wet weather.
In August we achieved a record price in a United auction, with an average realization of 34.66ppl which was almost 6ppl above the July realization.
At present we are seeing the benefit of that strong auction and the results from the good October and November auctions in the current milk prices.
However dairy markets have moved sharply down in recent weeks especially in powder and butter. This is reflected in the cuts in Irish Dairy Board reference prices and has been widely reported across the dairy industry press. Most commodity buyers are covered into 2008 and current demand for powder and butter is low. The US and New Zealand have increased their output by 4% and 2% respectively and with a weak US dollar, US product is widely available in international markets including the EU. New Zealand is offering powder into the market at prices well below Dale Farm and other EU processors. The Fonterra milk price is around 20ppl yet United is selling in competition with Fonterra without any export refunds and is paying its members over 30ppl. And we have more milk to sell because the Northern Ireland milk supply has moved from being 6% down year on year in July to almost 3% ahead at present.
The current breakeven processing return for spot sales of milk powder is a milk equivalent price of circa 23.5 ppl. The auction has moved down sharply because it is following the market prices for powder and butter which have moved down sharply. The auction is an open and transparent selling method and just as it reflected the strong market demand and high returns in August it is now reflecting the weaker market demand and lower returns in December. Markets may pick up in the new year when New Zealand production will start to fall, but frankly we don’t know at present which way they will go. Much will depend on whether milk supply increases in 2008 at too fast a rate. I said this at the series of farmer meetings we have just held, one of which your father attended.
I can not speak for the beef industry or what beef farmers will do; we have done nothing in United to encourage them to switch to dairy. However they recognize the bleak outlook from their Taskforce report and see dairy as a much better opportunity.
Regards
David Dobbin
Dr David Dobbin CBE
Group Chief Executive
United Dairy Farmers Ltd
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Farming is the oldest JOB in the world, too many people seem to have it confused with the oldest PROFESSION!
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12/12/2007, 13:17
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Big Bird
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Re: United dairy farmers Dec Auction
quote:
mootoyou wrote:
I'm actually surprised it hasn't worked the other way....
Let's face it, there never has been a better time to sell (especially if your'e in an area with no BT restrictions)
With the price of milking cattle at a high anyone who is either near retirement age with nobody to follow on, or perhaps people who don't own their own farm has to seriously consider whether there will ever be a better time to sell.
The price of fresh calved cows/heifers has doubled compared to this time last year, the extra revenue this would bring to many if considering getting out must be an attractive factor.
As a tenant with a small dairy farm, when you work out what you would need to live off of were you not running a dairy with an agricultural rent on the house and the ability to manipulate some costs through the business before tax, getting out can soon look a worse option than carrying on.
We reckon we'd need 40k/year plus, which would be extremely difficult with one kid not at school yet. That would mean living in a smaller house somewhere in a town, and doing a job of necessity rather than the one we still enjoy doing most days.
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12/12/2007, 13:50
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Dairylands
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Re: United dairy farmers Dec Auction
I heartily agree.
The other advantage of farming is that you have so little free time you don't need any disposable income!
Plus the standard of dress isn't expensive to maintain!
Then there is the flexible working hours... on a good day just put in your 16 hours - and the rest of the day is your own to do what you like with.
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12/12/2007, 14:30
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mootoyou
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United dairy farmers Dec Auction
But for those near retirement age or without anyone taking over the reins in the next few years, would they not be better getting out sooner than later?
What I am trying to say is will the cattle price ever be better?
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12/12/2007, 14:41
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FiringOnAllFour
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Re: United dairy farmers Dec Auction
Well, stock prices can only go one way from here. Kilrea mart didn't soften much on tuesday mind you. SFP came in. It, and the milk cheque every 20th seem to help trade along.
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12/12/2007, 20:17
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FiringOnAllFour
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Re: United dairy farmers Dec Auction
Despite a slight recovery last month, the March auction was, again, disheartening at a miserable 22.6ppl. Take roughly a penny off that for producer price.
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20/3/2008, 19:46
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FiringOnAllFour
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Re: United dairy farmers Dec Auction
We have been paid 21.5 base for april milk. Hopefully this is the bottom, but there will be at least two more cheques like this one. The auction for the next three months has taken a small step of 2p forward to mid-24ppl. Further climbs are needed to take us out this entirely uneconomic situation.
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24/5/2008, 10:30
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FiringOnAllFour
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Re: United dairy farmers Dec Auction
The united auctions seem to have peaked at 26.5 ppl, the last one being a penny lower. I therefore wouldn't be surprised if our spring price next year starts with a '1'.
Does anyone have any thoughts on that?
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28/8/2008, 20:44
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