El2-Lancaster Farming, Saturday, April 2, 1988
Milk Market News
WY TOM JURCHAK
Lackawanna Co. Agent
SCRANTON As expected,
following the SO cent cut in the
support price, butter and cheese
prices fell down to support levels
and pulled the manufacturing
grade milk price with them. The
Minnesota-Wisconsin Price Series
fell like a rock in February to
$10.60 or 31 cents less than last
month. That makes the M-W just
74 cents lower in only three
months and heading for die sup
port price of $10.33 by May. That
would be a total drop of $l.OO in
prices in six months.
In Order 2 the Class II price for
February took the full impact of
the 30 cent drop to $10.62 but
Class I prices lost only 22 cents to
$13.67 for the month. This made
the blend price $ll.BO for Febru
ary. That was 23 less than January
and 63 cents less than last Febru
ary. Forecasters have set the blend
price down to $10.60 in May. This
would mean an additional drop of
$ 1.20 and the reason many produc
ers are looking to over order pric
ing for help.
Where It Comes From
All the numbers for 1987 are in
and the final revisions have been
made to go into the record. Milk
production was pegged at 142.5
billion pounds which was only 0.6
percent below 1986. Cow numbers
were down 4.4 percent to 10.3 mil
lion partly as a result of the Dairy
Termination Program. That was
479,000 cows that didn’t produce
6.6 billion pounds of milk that
would have doubled Commodity
Credit Corporation purchases last
year. So where did the milk come
from? It wasn’t from herd expan
sion so it had to be from increased
production per cow and that’s what
the figures show.
While cow numbers were down
four percent, production per cow
was up four percent or 526 pounds
to 13,786 pounds per cow. Higher
production per cow has been hap
pening ever since the first ones
landed with the colonists at James
town but at an increasing rate.
From 1980 to 1986 the yearly
increase averaged 228 pounds per
cow and now it’s 526 pounds or
more than double the average of
the last six years. This is what
reduced the effect of the Dairy Ter
mination Program that removed
the 12 billion pounds of milk it was
designed for but producers made
up for it in increased production
per cow.
That’s why you got another 50
cent cut in the support price on
January 1 and why you can expect
another next January unless some
disaster changes the price of feed.
Total purchases by CCC last year
were die equivalent of 6.7 billion
pounds of milk or 4.8 percent of all
the milk you produced. If produc
tion per cow continues to increase
at the present rate CCC purchases
will be even higher in 1988. In fact,
predictions for 1988 have already
been revised three times since
December and the latest one is
over seven billion pounds. But
that’s not the end.
Total cumulative purchases by
CCC from January 1 to March 4
were 3.2 billion pounds of milk
DVTCIV
XSUSH flftiPlp
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SEE YOUR LOCAL BUSH HOG DEALER
BINKLEY & HURST
BROS. INC.
Lititz, PA
717-626-4705
FARMERSVILLE
EQUIPMENT, INC.
Ephrata, PA
717-354-2150
GEORGE N. GROSS, INC.
Dover, PA
717-292-1673
A.L. HERR & BROS.
Quarryville, PA
717-786-3521
KELLER’S FARM
MACHINERY, INC.
Quakertown, PA
215-536-4046
equivalent or 41 percent higher
than the same period last year.
That 3.2 billion is nearly two thirds
of the way toward the five billion
pounds for the year that will trigger
another SO cent support price cut
next January. Is it any wonder that
CCC is already figuring what
they’ll have to pay for butter, pow
der and cheese when the support
price drops to $lO.lO next year?
And why some forecasters are pre
dicting that the Minnesota-
Wisconsin Price series will fall
below the $ 10.33 support pice this
spring? It has only 27 cents more to
go in the next three months and it
dropped 74 cents in the last three
months. Even 75 cents in pre
miums won’t be enough to make
up for the price drop just in the last
year with prices the lowest in nine
years.
Where It Goes To
The most disturbing part of last
year’s numbers was a revision in
commercial sales. We’ve come to
2512 SERIES
LEHIGH AG
EQUIPMENT
Allentown, PA
215-398-2553
MARSHALL
MACHINERY INC.
Honesdale, PA
717-729-7117
MILLER SALES
& SERVICE INC.
Stewarts town, PA
717-993-2732
NEUHAUS'ES INC.
Glen Rock, PA
717-428-1954
expect an increase of three percent
a year as a result of the promotion
progress and the fact that dairy
products are still a bargain among
food costs. However, when you
add up all the milk production;
subtract the CCC purchases and
changes in storage stocks you
increased commercial sales only
1.3 percent last year.
That followed a revised figure
of 2.1 percent increase in 1986
over 1985. The big gainer was still
cheese but you also had slight
increases in fluid milk and ice
cream while butter and powder lost
some sales. The dairy industry has
been cautioned about expecting
too much for too long in expanding
commercial sales and perhaps it
has happened. You certainly can’t
survive if prices keep falling and
perhaps you’ve reached the point
where lower prices and advertising
have done all they can in increas
ing consumption. The well known
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NICHOLS FARM EQUIP. STRALEY FARM
Bloomsburg, PA SUPPLY INC,
717-784-7731 Dover, PA
PEOPLES SALES & 717-292-4443
SERVICE
Oakland Mills, PA
717-463-2735
PETERMAN FARM
EQUIPMENT, INC.
Carlisle, PA
717-249-5338
STANLEY’S FARM
SERVICE
Klmgerstown, PA
717-648-2088
STOLTZFUS FARM
SERVICE
Cochranville, PA
215-593-2407
TRACTOR
PARTS CO.
Bloomsburg, PA
717-784-0250
UMBERGER’S OF
FONTANA
Lebanon, PA
717-867-5161
C.J. WONSIDLER
BROS.
Quakertown, PA
215-536-1935