Al6-Lancaster Farming, Saturday, September 15,2001
GRAIN. CATTLE. HOG,
& MILK BFP
FUTURES MARKETS
Markets Courtesy of Chicago Board and Mercantile Exchange
Closing Bids: Thursday, September 13,2001
Soybean Meal
Weekly Dairy Market Outlook
Ken Bailey
Penn State
Sept. 13,2001
Terrorist Attack Creates
Financial Uncertainty
• Attack could spark a global
recession.
• Consumer confidence
shaken.
• Impact on the dairy indus
try less certain.
• Dairy as “comfort food.”
The simultaneous terrorist at
tacks on New York and Wash
ington had two intended targets:
the U.S. financial markets and
the U.S. Defense Department.
The loss of life on U.S. soil is un
precedented, and the ultimate
impacts on the U.S. economy
are unknown.
There is concern that the
attack will result in pushing an
already shaky U.S. economy
into a full-blown recession. Con
sumer confidence and spending
were already showing signs of
weakness. American consumers
may react by postponing major
expenses such as automobiles
and houses.
Sectors of the economy most
vulnerable would be travel
particularly the airlines, insur
ance and banking, large con
sumer items such as
automobiles, and retail.
The financial markets were
literally shut down because of
the crisis. The New York Stock
Exchange (NYSE), the Nasdaq
Stock Market, the American
Stock Market, and the Chicago
Board of Trade and Chicago
Mercantile Exchange were all
shut down for three days. The
Wall Street Journal reports that
these exchanges haven’t been
shut down for this long since
1914, when the NYSE was
closed for four months in re
sponse to the war in Europe.
Economists have little to go
on when comparing this human
tragedy to past events. We do
know that the 1990 Gulf War
drove up oil prices, depressed
consumer confidence, and re
sulted in an economic sloW-
down,
That event began on August
2,1990 with the Iraqi invasion of
Kuwait and continued until the
military conflict ended on
March 5, 1991. The conflict af
fected the U.S. economy during
the last half of 1990, as well as
the first quarter of 1991.
The impact of the Gulf War
on the U.S. dairy industry was
mixed. Demand for American
cheese and pizza cheese was
strong during the last two quar
ters of 1990. A lot of people
stayed home, ate pizza, and
watched CNN news. However,
demand for butter fell signifi
cantly before and after the
event, and demand for Ameri
can cheese fell the first half of
1991.
Consumers today may react
the same way. They may spend
less money eating out, traveling,
and going to celebrations over
the next few months. However,
dairy products are a staple as
well as a comfort food. Con
sumers may spend more money
eating dairy products within the
confines of their homes. There is
no doubt that U.S. policymakers
will upgrade efforts to stave off
an economic slowdown. Again,
•♦• ♦ > .
•♦ f •
Lean Hogs
Date
Oct 01 6015 6115 59806110 +6B
Dec 01 5605 564555705627 -28
Feb 02 5655 5705 5625 5700 -10
Apr 02 5780 5815 57525797 -13
May 02 6250 629062276270 -5
Jun 02 6470 655064706550 +5
Jul 02 6275 629562506295 unch
Aug 02 6040 606560156065 +8
Oct 02 5450 54505405 5450 unch
09/13/01
09/13/01
09/13/01
09/13/01
09/13/01
09/13/01
09/13/01
09/13/01
09/13/01
Composite Volume Openjnt
09/11/01 169 41218
Live Cattle
Date
09/13/01 Oct 01 7200 7235 71807212
09/13/01 Dec 01 7380 740773457385
09/13/01 Feb 02 7555 7555 75157530
09/13/01 Apr 02 7737 773776877710
09/13/01 Jun 02 7370 737573357355
09/13/01 Aug 02 7420 742073907390
09/13/01 Octo2 7510 752075107520
Composite VolumeOpenjnt
09/11/01 38 112898
Pork Bellies
Date
09/13/01 Feb 02 8300 8515 82608467
09/13/01 Mar 02 8437 850082908452
09/13/01 May 02 8547 86708545 8667
09/13/01 Jul 02 8650 865085508650
09/13/01 Aug 02 8650 865085508650
Composite Volume Open_lnt
09/11/01 29 2885
Oats
the Wall Street Journal quoted a
leading economist who cited
possible antidotes to a recession
as a quick move to cut taxes,
more federal spending, and
easier monetary policy. Spend
ing for defense and intelligence
will likely increase. The Bush
Administration has sent a $2O
billion request to the Congress
today for emergency spending
measures.
The health of the U.S. econ
omy is a very important factor in
determining demand for U.S.
dairy products. We do have a
dairy price support program
that is poised to purchase sur
plus dairy products in the event
markets weaken. But that pro
gram only kicks into full gear
once Class 111 milk prices fall to
$9.80 per C WT. (Class 111 prices
are more than $l5 per CWT.)
Thus, U.S. dairy farmers are
very dependent on selling their
products to eager consumers.
American consumers will
likely remain positive about our
country’s future, and any eco
nomic slowdown will, we hope,
be short lived. The problem is we
don’t yet understand the full
human and economic implica-
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tions of what has transpired.
There is no precedent. Analysts
I spoke with are citing the
impact of these events on the
dairy industry to be neutral to
only slightly negative. It’s very
possible that consumers will
look to dairy foods as a source of
comfort in these trying times,
and as a symbol of what is good
and pure in America.
Average Farm Feed
Costs for Handy
Reference
To help farmers across the state to
have handy reference of commodity
input costs in their feeding operations
for DHIA record sheets or to develop
livestock feed cost data, here’s last
week’s average costs of various ingred
ients as compiled from regional reports
across the state of Pennsylvania.
Remember, these are averages, so you
will need to adjust your figures up or
down according to your location and the
quality of your crop.
Corn, No.2y 2.30 bu., 4.11 cwt.
Wheat, N 0.2 2.50 bu., 4.18 cwt.
Barley, N 0.3 —1.38 bu., 2.95 cwt.
Oats, N 0.2 —1.39 bu., 4.34 cwt.
Soybeans, No. 1 4.41 bu., 7.36 cwt.
Ear Corn 62.34 ton, 3.12 cwt.
Alfalfa Hay 115.00 ton, 5.75 cwt.
Mixed Hay —113.75 ton, 5.69 cwt.
Timothy Hay —116.25 ton, 5.81 cwt.