A36-Uncaster Fannins, Saturday, October 25,1986
The Milk
Check
TOM JURCHAK
County Agent
Demand Pull
Increasing demand and
decreasing production continue to
be reflected in September milk
checks. Higher butter and cheese
prices boosted the Minnesota-
Wisconsin Price Series to $11.55 in
September. That was 22 cents
better than August and 57 cents
better than last May. For what it’s
worth, it’s the first time it has been
over the support price since May
1985. Along with the increasing
demand and price for butter and
cheese, fluid milk sales are in
creasing in most markets around
the country.
We expect some increases in
September over August with the
opening of schools but here in
Order 2 there was a 12 million
pound or a 3 percent increase in
fluid sales over last September. If
you add to that a two percent cut in
production in Order 2 over last
year you get a Class I utilization of
43.6.
Something you haven’t seen
since October 1984 during the
diversion program.
It all adds up to a uniform or
blend price of $12.79 for September
in Order 2. That’s 33 cents more
than August and 42 cents more
than last September. Your
Louisville Plan pay back was nine
cents more in September over
August but that still gives you 24
cents more from higher prices and
better Class I utilization. Adding
that to the 24 cent gain you made in
August you can say the market has
improved 48 cents in the last two
months. Compare that to a drop of
65 cents from January to June and
you can see what a turn around the
market has made.
More Coming
However, that’s not the end -
there’s more coming. The con-
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tinuing increases in demand are
fooling the predictors who couldn’t
believe that the 3 anf 4 percent
increases in commercial disap
pearance in 1984 and 1985 could be
sustained in 1986 but the figures for
the first eight months of this year
show another 3.4 percent jump. All
of that in spite of the giveaways
that included 447 million pounds of
cheese and 119 million pounds of
butter just in 1985 alone and it’s
continuing at the same rate in 1986.
It’s difficult to know how much
the giveaways replaced com
mercial sales but estimates go
from 150 to 270 million pounds for
the 447 million pounds of cheese
distributed. In addition, Com
modity Credit Corporation has
been selling butter from its storage
stock for two months and, believe
it or not, for the first time in 10
years, sold back 80,000 pounds of
Grade A non-fat dry milk that was
not for animal feed.
So, the best predictions last
Spring had the Minnesota-
Wisconsin Price Series peaking
this Fall at $11.68 and it looks like
we can make it but even at the
current M-W we’re looking at Class
I prices in November tliat are 73
cents better than last year. And
when you take off the Gramm-
Rudman assessment of 12 cents
starting with October’s milk you
should see another 50 cent increase
in your milk check before the end
of the year.
Opportunity Ahead
With all this tightening of market
supplies of milk and the increasing
consumer demand for dairy
products the opportunity for
negotiating even higher prices
with Order 2 handlers should be
apparent to all producers. Nearly
every other Federal Milk
Marketing Order in the country
: n r
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3 For $3.39
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Medicated, design
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has been doing u for almost 30
years but not in Order 2.
When Federal Orders were
established in 1938 the purpose was
to guarantee an adequate supply of
fluid milk for consumers with the
pricing left to the producers.
That’s right. Federal Orders are
written by producers to regulate
handlers but somewhere in the
last 30 years you’ve forgotten the
goals while you were busy trying to
use hard work and long hours to
replace marketing skill.
There’s a lot of similarity in the
pricing formulas in milk
marketing orders. They set the
price for Class II milk on the
Minnesota-Wisconsin Price Series
because that’s the only
' unregulated price for milk used to
" make dairy products. Then they
add a “Class I differential” to the
M-W price and call that the Class I
price. Originally the “differential”
was the cost of moving milk from
Wisconsin to the marketing area
but they don’t represent anything
anymore.
Basically the strategy in pricing
was to get all the market would
bear in the Class I price and sell
the remainder as Class II for what
it would bring for butter, powder
and cheese. In any case, the Class I
price in Federal Orders was
definitely a minimum price that
handlers must pay but producers
were expected to negotiate higher
prices to get “all that the market
would bear.”
The fact that Order 2 producers
never negotiated a Class I price
Americana
DEFOREST, Wis. - The fourth
Americana Sale, sponsored by
American Breeders Service,
featured 67 purebred Holstein cows
and heifers that were sired by 21
ABS bulls and consigned by
breeders in 19 states. They
averaged $11,970.
The sale, held in the Dane
County Coliseum during the World
Dairy Expo, drew a crowd of 5,000
people. Guests and bidders came
from just about every state in the
nation plus over 50 foreign coun
tries.
Long-Haven Valiant Sally, Very
Good, consigned by Carlos and
Doug Long of Long-Haven Farms,
Clayton, Mich., established a new
record price for Expo cattle sales
when she sold to Golden Oaks
KENDAL K.E.W. HOBBY HIGH
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FREEZE
o
QUAKER STATE
with handlers is evident now in the
prices paid in other markets. For
September milk in Order 2 the
Class I price was $13.61, the
minimum provided by the order.
In Pittsburgh the Federal Order
minimum price for September was
$13.38 but the producers negotiated
an 80 cent premium so the handlers
paid $14.18 for Class I milk. In
Chicago the minimum Class I price
was $12.73 but the producers asked
for and got a $1.61 increase so the
price was $14.34 to the handlers.
Why $1.61 in Chicago and only 80
cents in Pittsburgh? Maybe that’s
all that market conditions
warranted in each area but they
both got more than the minimum
price.
Looking at all the Federal Or
ders where producers negotiate
over order Class I prices the
average for October will be 86
cents. That’s six cents more than
August and September, another
indication of tightening milk
supplies.
Right here in Order 2 the
minimum Class 1 price has gone
from a low of $13.39 in April to
$14.10 in November this year.
That’s a difference of 71 cents a
hundred in seven months. Con
sumers in New York and the rest of
the marketing area drink about the
same amount of fluid milk every
month. They don’t even know that
you’re getting three or four cents a
quart less in the Spring than in the
Fall. They certainly don’t know
that the New York dealers are
Sale Averages $11,970
Farm, Wauconda, 111. for $350,000.
Sally, the number one cow on the
Holstein Association’s Premier
Performer List is also the top
daughter of the ABS bull S-W-D
Valiant, for milk, fat and protein.
As a 3 year old she produced 40,022
pounds of milk testing 4.6 percent
for 1,823 pounds of fat and 1,428
pounds of protein.
A second Valiant daughter Tex-
Stein Valiant Octavia, VG-86,
consigned by Robert E. Stein
berger Sr., Windthorst, Texas
brought $56,000 from Norman
Meissner, Chili, Wis.
Lekker Milkmaster Dash-ET,
VG-88, a 4-year-old daughter of Gil-
Tex-B Milkmaster sold to Merit
Holsteins, Columbus, Wis. for
$47,000. She was consigned by L
Up To 1,000 Lb.
P.S.I. Includes Auto.
Bypass Handle
U.L. Approved
For Only
$399.95
SALE PRICE
$3.59g«i.
6 Gal. Case
Lots— s 3.29 Gal.
55 Gal.
Drum .. s2.99cai.
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paying less to their producers than
the Pittsburgh dealers.
What I’m trying to show is that
Class I prices set by Federal Or
ders are minimums and that in
most other areas producers have
negotiated over order premiums
anywhere from $2.16 in Car
bondale, Illinois and St. Louis,
Missouri to 38 cents in Houston,
Texas and Seattle, Washington.
It’s so common in all other
markets in the country that it’s
expected from producers.
Even during the years of record
high national milk production and
record high government purchases
of dairy products to support milk
prices, over order premiums on
Class I milk were negotiated in
most markets.
Now you have a situation
developing in Order 2 where milk
supplies are tightening mainly
because of increasing demand.
Those minimum Federal Order
prices are not rising fast enough
because they’re tied to butter,
powder and cheese prices. So, why
not ask for over-order premiums
from the handlers on their Class I
sales?
As long as all producers ask for
the same premium and it is paid by
all the handlers the sytem will
work here as it does in other areas.
All you have to do is forget all of
your prejudices and join one
organization without any dues or
assessments that will negotiate
higher prices with handlers.
Now is your chance.
and M Holsteins also of Columbus.
A 15-month-old daughter of Sterk
RA Ijon was the top selling heifer
at $15,000. Plushanski Ijon
Francine, consigned by Charles
Plushanski, Kutztown, Pa., sold to
Roy Homan and Ron Osofsky of
Pine Plains, N.Y.
One of the sale features was a
group of daughters of Tri-Day
Valiant Gold, the highest Total
Performance Index bull alive.
These eight heifer calves ranging
in age from seven to ten months,
brought an average price of $3,800
for eight different consignors.
Twenty-two of the 67 lots were
sold for export to Canada and other
foreign countries.
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