C4—Lancaster Farming, Saturday, October 17,1981 tarn Gaaaja? mm (Continued from Page C 3) When coupled with first quarter use, down 5 percent, and the preliminary July data, up 2.2 percent, commercial use for the first 7 months was about even with a year earlier. Commercial use includes civilian and military purchases of milk and dairy products for domestic and foreign use, but excludes farm household use and USDA donation of butter, cheese and nonfat dry milk. January March sales of butter on a daily average basis were down about 23 percent, while second quarter use was up about 33 percent, leaving butter use for the year about unchanged. However, with July butter use down about 9 percent, the January July sales fell 2.7 percent American cheese sales during $3OO million water loan program faces Pa. voters HARRISBURG A $3OO million water projects bond issue will face Pennsylvania voters this fall. The bond referendum, if ap proved by voters, will provide financing to local governments and private water companies for rehabilitation of public water systems, and projects aimed at improving flood protection, dam safety, drought emergency con ditions and port facilities. Hie key to the $3OO million program is that the bond issue is a loan. No taxpayer dollars will be used to support these loans. All funds for the program will be raised through the sale of bonds, which will be paid back by the companies, authorities or local governments borrowing the money. Gov. Dick Thornburgh and leaders of the General Assembly proposed legislation for the referendum on June 1. The legislation was passed unanimously and was signed by the Governor on July 12, placing the question on the Nov. 3 ballot. “The Department of Agriculture is 100 percent in favor of the water loan referendum,” said Secretary Hallowell. “It’s a necessity in meeting Pennsylvania’s water needs for the 1980’s. I hope voters will give the issue serious con sideration at the polls.” ATTENTION FARMERS FARM EQUIPMENT HAVE DIESEL FUEL INJECTION PROBLEMS? DON'T WAIT Make your repairs now. Get your money's worth and know what you are getting when you buy fuel in jection service. Call: MILLER DIESEL INC. 6030 Jonestown Rd. Harrisburg, Pa. 17112 717-545-5931 /SP5> ASSOCIATION OF DIESEL SPECIALISTS ACCREDITED DEPENDABLE SERVICE WITH 24 YEARS EXPERIENCE January July were up about % percent, while sales of other cheese varieties were up about 4 percent. Meanwhile, fluid milk sales during the first 6 months of the year continued a long-term trend and declined slightly, less than 1 percent from a year ago when adjusted for calendar composition. Commercial use of milk and dairy products on a milk equivalent basis may increase some during the third quarter. Retail prices of dairy products are expected to have increased less than meat prices during July September but consumer incomes may not have increased. Therefore, while consumers may have found dairy products relatively more attractive, they may not have had the money to more of them. Hallowell noted that many groups such as the Pennsylvania Farmers Association and the Pennsylvania State Grange have added their endorsements m support of the referendum. The “Vote Yes for Water” committee, a non-governmental committee representing more than 40 organizations supporting the referendum has called for a minimum of $220 million from the bond issue for rehabilitation of water supply systems and dam safety projects. A maximum of $4O million each would be used to finance flood control and port facility projects. Governor Thornburgh has endorsed this concept for use of the funds. ' “Water problems are obvious to the rural community,” Hallowell said. “Of the 2,400 community water supply systems in the state, three-quarters serve rural com munities with less than 1,000 people, and more than one-half have deficiencies which could be corrected with the loan money. The intent behind the water loan referendum and proposed bond program is to make needed funds available through the state so that as many Pennsylvanians as possible can benefit.” TERRE HILL SILO CO., INC. TERRE HILL, PA 17581 ★ TRI RIB CONCRETE STAVE SILOS ★ PATZ FEED & MANURE EQUIPMENT ★ SERVICE FROM A WELL STOCKED PARTS DEPT. ★ FIBERGLASS SILO PARTS & CALF HUTCHES ★ EXPERT SILO REPAIRS FOR FAST EFFICIENT SERVICE CALL TERRE HILL 215-445-6736 SYKACUSE Dr. Tun Dennis, Woodbury Stock Farm, Penn Yan, • N.Y., dominated the championship classes in a strong showing of Hereford cattle at the recent New York State Fair in Syracuse. Placings were, made by John Shanks, Mocksville, N.C. GH Prospector 3530 was designated grand champion bull after capturing the yearling championship. KH Prospector 7002 was the sire of the junior yearling entry shown by Woodbury Stock Farm. Millborn Farm, Sherborn, Ma., captured reserve grand champion . bull honors with their two-year-old entry, MBF U Dom 460, sired by MBF LI Brooks 290. The*' bull earlier had been named senior bull champion. Woodbury Stock Farm returned to the champion spot in the female show when judge Shanks selected GH Ms Prospect 0860 to top the heifer division after being named senior champion. This summer yearling entry is a daughter of KH Prospector 7002. Powisset Farm, Dover, Ma., exhibited the reserve senior and reserve grand champion temaJe with a daughter of FRC Yampa King 37. LI Miss Carpenter, an early spring yearling entry, has been a constant winner lor the Powisset tirm this tall as she previously captured the grand championship at the Maine State Pair. Millborn Farm also claimed the bull calf championship with MBF LI Dom 519 coming from the senior bull calf class. He is a son ot MBF LI Brooks 291. Selected as reserve bull calf champion was POW Mr LI Domino IK, a junior calf shown by Powisset Farm. The reserve yearling champion bull honor went to Highlawn Farms, North Rose, N. Y., with HL Arthur 374, the first-place late spring yearling bull sired by THF Big Arthur 6054. The reserve senior champion bull award went to a joint entiyof He noted that sound public water systems, projects for flood protection, dam safety, (brought emergencies and port facilities are important investments for Penn sylvania’s future. "These are essential to our health, safety and economic well-being. The water problems faced by Penn sylvanians, and the referendums is the first, but vital step toward a solution,” he said. N.Y. State Fair posts; Hereford results A**.:*.'* MillbornFarm and Powisett Farm with Dom LI Domino 9640. The senior yearling is a son of LI Domino 76744. Millborn Farm led out the junior champion female, MBF U Ms Dom 521, the first-place senior calf by MBF Brooks 291. SK Victor Lass 812, a junior calf, claimed the reserve champion heifer calf award. She was exhibited by Schmidt and Knese Heretords, Cato, N.Y. Farming’s Futures By David K. Sauder Commodity Advisor Trade Tech, Lancaster What, Exactly, is the purpose of Hedging? How does it work? The primary purpose of hedging is simply to “neutralize” the impact of adverse price level changes. A hedge is a sale (or purchase) on the futures market for the purpose of establishing a price in advance of actual cash delivery. Farmers and elevator operators hedge to protect the value of grain in storage against declining prices or, to put it another way, to establish the selling price for their grain. Exporters hedge to lock in the cost of grain they have made ' commitments to sell. Processors hedge at certain times to protect themselves against an increase in raw material prices and at other times to protect themselves a decline in the value of their inventories. For whatever purpose hedging is employed, it consists of taking a position in the futures market that is equal and opposite to your position in the cash market. Say you currently own com. You are thus “long” com in the cash market. If theprice of com goes up you will make money and if the price of com goes down you will, lose money. To hedge against the possibility of a price decline, you can offset your long position in the cash market by taking a short position in the futures market. That is, by selling a futures contract. Then, if the price of com does decline, the loss in the cash market will be approximately matched by a profit in the futures market (when the futures contract sold at a high price is bought back at a low price). Example: To lock in a particular price for delivery of com in March, you sell a futures contract at, say $2.25. Subsequently, there is a weakening in the world demand for com and the local cash price declines by 20*. But because of the tendency of the basis to narrow as the delivery month is approached, the futures price declines by, say, 30* a bushel. Buying back the futures contract at a 30' profit fully offsets the 20* drop in the rash price and gives you a 10' a bushel payment for storing your com until March. Why are futures prices—and the relationships between futures prices for different delivery months important to sellers of grain? Futures markets are the only place where grain is actively bought and priced for future delivery and, as such, the only marketplace that quotes the owner of grain a cents-per-bushel payment for borage. Woodbury Farm swept the group competition with the first-plan get-of-sire with the progeny of ’ Prospector 7002 and winning ti coveted best six-head award. Other first-place class winners included: Early Spring Yearling Bull, Highlawn Farms with Arthur 368; Winter Heifer Cai Millbom Farm with MBF LI ' Dom 526; Late Spring Yearlinj Heifer, Highlawn Farms with »’ Miss Art 401. By following futures prices, particularly at the time that marketing decisions are made, and by understanding what they mean, an owner of grain is able to make better informed decisior about whether to sell grain now oi store it for later sale.' And, if the owner is considering selling store grain on the futures market i order to hedge against price risk: the relationships between differei delivery months (the amount of ti earning charge) can help decide in which delivery month hedge. More about thislater. What is the relationship betwei local cash prices and other, mo: distant futures delivery months? The numbers change but arithmetic doesn’t. As previously discussed, prici for distant futures delivery montl differ from the nearby futun price by the amount of the currei carrying charge. Thus, if thi March futures price is $2.10 am the carrying charge is 4* a montl the May futures price would 1 $2.18; the July futures price woi be $2.26; and the Septembi futures prices would be $2.34. Thi is, futures prices usually stair-st( upward. A basis can be calculated for ai futures delivery month-simply b< subtracting the current cash prk from the price of the designate futures contract. For example, the-local cash price is present) $l.BO and the July futures prices. $2.26, the July basis would be 46' under. Basis for distant deliv<> months is affected by the sl factors that affect the nearby bai plus one other: The amount of tl carrying charge. As a result, thei can be significant fluctuations the distant basis even when the> is no charge, or only a negligibli change, in the nearby basis. The basis pattern for distai delivery months is similar to th; for the nearby delivery month. That is, the basis tends to narrc by the amount of the reductii in carrying costs as the deliv^ month is approached. Assuming carrying charge of 4* a month, local price that is 46' under tl July futures price in January likely to be only 42* under the J> futures price in February. only 38* under in March. And om 32* under in April. And so on unti by July, the remaining basi should be only a rejection of' difference due to location. Send your questions ah futures trading to: Farmini Futures, Lancaster Parmii Newspaper, Box 366, Lititz, 17543.
Significant historical Pennsylvania newspapers