C4-Lancaster Farming, Saturday, July 19,1986
The Milk
Cheek
TOM JURGHAK
County Agent
Decreasing Increases
While many are rushing to write
off the Farm Security Act as a
failure to the dairy industry before
most of its provisions have been
implemented, there are signs of
improving market conditions as
we come out of the usual spring
flush.
It took us four years to work
ourselves into the present sup
ply/demand problems so it’s
unreasonable to expect we can
work ourselves out of them in four
months. However, while milk
production is still higher than a
year ago it is increasing at a
decreasing rate as economists
describe it. That means that the
increases are getting smaller each
month. Back in January it was
eight percent over 1985 and for the
first time three months you
averaged seven percent. Then in
April it dropped to five percent and
in May it was less than three
percent.
This has produced the unusual
situation of increasing butter
prices in the spring and keeping
the Minnesota-Wisconsin Price
Series from falling as far as it
usually does from January to June.
Butter prices have improved from
|1.37 a pound, the average for
March, to $1.39 for June and on
July 3it went up to $1.42 a pound.
The support price for butter is
81.40 a pound so if the market
maintains this improvement it will
mean less butter that will be
purchased by the Commodity
Credit Corporation. The market
price would have to go to $1.54
before CCC could start selling its
butter but that’s 12 cents more and
seems unlikely. However, the
butter price advanced 18 cents a
pound in 1984 when we had the
diversion program.
The Minnesota-Wisconsin Price
is another story. We have to count
our blessings in the fact that it
dropped only 12 cents from $11.12
in January to $ll.OO in June. The
lowest during April and May was
$10.98 so it looks like we’re on our
way up already. It may not sound
like much until you compare it to
1985 when the M-W fell $1.16 from
January to June and never
recovered by December. That was
when we had the spring flush in the
faU.
Cheese prices have not yet
shown the same increases as
butter but when they do you’ll see a
greater impact on the M-W price,
hopefully this fall. How much that
impact will be is still speculative
and changes from the first to the
second or third disposal period of
the Dairy Termination Program
will have to be considered.
However, USDA estimates that
were running about 30 to 40 cent
increases in the M-W this fall have
now been raised to a range of 40 to
70 cents above the present price. If
it gets to $11.60 this fall it will be 40
cents more than last year and that
will be enough to take care of your
assessment for the Dairy Ter
mination Program.
However, a 70 cent increase in
the M-W price before the end of the
year may not be out of the
question. We still have six months
to go and with declining production
and increasing sales it could
happen. In 1984 during the
diversion program the M-W in
creased 63 cents from June to
November with only a four percent
drop in production in a year of
record high shipments. Besides we
have a lot more dairy cattle to sell
qs we finish the first disposal
period of the Dairy Termination
Program in August and start a new
one in September. Up to June 14
only 471,700 head had gone to
slaughter and 13,822 exported
under the DTP out of a total of 1.5
million head. We’ve sold less than
a third of the cattle to be disposed
of in the program and over half of
them must go in the first period.
You’ll also get back your 12 cent
assessment after September 30
when that legislation ends.
Hopefully it won’t be renewed.
Other Improvements
If milk production is increasing
at a decreasing rate than con
sumption is increasing at an in
creasing rate. We know that
“commercial disappearance”
(those dairy products not sold to
CCC) has increased seven percent
in the last two years but so far this
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Manufactured By
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• y«” PLATE STEEL FLOOR
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SPECIAL SALE PRICES THRU JULY
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year you’re getting about a four
percent increase. No one thought
you could maintain three percent a
year for two years and now your
exceeding that in the third year.
The chairman of the National
Dairy Board says that this is the
best increase in dairy product
sales in 20 years. Even fluid milk
sales are up 2.4 percent and butter
was up nearly six percent. Cheese,
of course was the leader at 12
percent and he says per capita
consumption for all dairy products
is up over 10 percent since 1983.
Much of the credit must go to
your advertising and promotion
program that started in May 1984
but some of the improvement
started before that because dairy
product prices have been com
petitive with other foods and more
consumers are learning the
nutritive value of your products.
& Tractor ./?/ S
$$ _ „ nr SS
i Tally !r *mJ |
Buck Tractor Pull Results
July 12.1986
5000 Modified
Tom Seas Bangor PA 2 454 Chev 296 4 Gary
Mills Fallston MD Turbine 286 6 Robert Wit
tenbrader Lake Ariel PA Allison 283 10
5800 FWD
Steven Conrad Port Deposit MD 1957 Ford
Full Pull Dan Fellenbaum Lititz PA 1969 Chev
299 11 Willie Omps Winchester VA 1986 Ford
298 8
7000 Modified
Curtis Luckenbill Schuylkill Haven PA 440
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LESS WEAR ON
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GESTATION TROUC
FOR CLEANLINESS
AND LONGER LIFE
Another good sign of market
improvement was an increase in
the Order 2 blend price from May
to June. That hasn’t happened
since 1979 except during the
diversion program in 1984. The
increase wasn’t much from $11.25
to $11.27 but considering your
increased production over last
year it looks good. That increase in
the Class I differential again added
10 cents to your blend price but it
was still 20 cents under last June.
Certainly, we have to look
closely for hopeful signs of im
provement because we’ve hardly
started on an 18 month adjustment
period. It’s much too early to make
a judgement and as long as there
can be no new cards dealt until we
play out this hand, let’s keep an
eye on the pot and see what
develops.
Chev Full Pull Andrew Zielinski Chase MD
Detroit 292 9 Vernon Kourey Stewartstown PA
Packard 284 4
Steven Conrad Port Deposit MD Foid
Full Pull/293 11 Willie Omps Winchester VA
1986 Ford Full Pu11'292 5 Ed Hanslovan Morns
dale PA 1980 Chev Full Pull 291 2
Robert Wittenbrader Lake Ariel PA Allison
Full Pull/243 9 Earle Henderson Stewartstown
PA Packard Full Pull 235 9 Bob Brown Hanover
PA Detroit Full Pull-226 6
Weight Per Unit
Complete Stall w/Back & Front
Gate-125 Lbs.
Order 2 Board
6200 FWD
9000 Open