Al6-Lancaster Farming, Saturday, December 8,2001 GRAIN, CATTLE, HOG, &MILKBFP FUTURES MARKETS Markets Courtesy of Chicago Board and Mercantile Exchange Closing Bids: Thursday, Dec. 6,2001 >eans Soybean Meal Weekly Dairy Market Outlook v _ . reduced the advanced Class 111 en Bailey skim milk pricing factor from Penn State $9 .60 per CWT in November to Nov. 30,2001 $6.32 in December. As a result, Planning For Milk the advanced Class IV skim Prices In 2002 P rice of $ 7 - 15 per CWT was used in the calculation of the • December Class I mover December base skim milk price. .. . , ... The technical explanation • u ook for 2002 milk won >t mas k the disappointment pnce „ , . . . . and concern of dairy farmers • Hedging strategies. . . $4 ' CWT fH^ S f? A n nnOU h nCe ?nm drO P in the Class I milk pricl that the December 2001 Class I Xh P said> produ cers who mover for fluid milk m all fed- forward . contra^ted the ir milk or era '°J WOUd dec . l,ne s 3™ hedged through a broker could F e T h Pn . or TS* have avoided this rather steep to $11.98/CWT. The class I dif- - ce d ferential is added to this figure p For ma P n oducers> hedging to determine the fluid price for and forward contracting his I milk in a given location (that is, rather mixed history . Reducers n e . P er CWT in w ho locked in milk prices for the Bos on, Mass, for December, months January t fi rough Sep . ... tember 2001 inevitably sat back This severe drop will come as and watched mark ' t prices a big shock for many dairy pro- c , imb we „ above their h £ dged ducers in heavy fluid markets. M For some> this was evi . In Pennsylvania, where 40 per- £ ence enough that hedgin g was cent of all sales are for fluid pur- „ risk busi * ess/ . Howlver, the poses, this drop alone will take recen { d st as it ■ shows roughly $1.50/CWT out of the how * on thc December milk check market can be. The reason for the December What js needed is a d con . SSe 1 o'rkes Se Servative hedging Strategy ' ™ S cheese and butter prices, the is no d jff eren t than investing lower butter price reduced the retirement dollars. Let’s advanced butterfat pricing * tart b revie wing the market factor from $1.8556 m Novem- outlook y for 200 2: ber to $1 4513 per pound m De- USDA . tg the foUowing: Oats crease 2.7 percent. • Consumption of dairy products will rise 2-3 percent. • Farm-gate milk prices will drop about $1.90 per CWT. • The U.S. economy will remain in a recession during most of 2002. • Imports of Milk Protein Concentrate “may” increase if world powder prices continue to drop. • USDA “may” further reduce the support price for nonfat dry milk, thus increasing producer exposure to lower Class I, 11, and IV prices. Now, let’s review the futures market. As of Nov. 29, 2001, the Chi cago Mercantile Exchange Class 111 futures market offered an av erage contract price of $12.20 per CWT for the first half of 2002 and $12.85 for the second half of 2002. Two other facts: the Class 111 price averaged less than $l2 over the past 5 years, and the outlook for 2002 milk prices are very uncertain at best. So, what is a good hedging strategy? Well, if you think the milk supply will grow at a rate less than 2 percent next year, as the market likely thinks, than do nothing and “ride the market.” However, if you believe the milk supply will grow in the 2-3 per cent range, as USD A does, then hedging part of your 2002 milk supply now (say 10-25 percent) Lean Hogs Date 12/06/01 Dec 01 4720 479546654777 +75 12/06/01 Feb 02 5200 534051905305 +4O 12/06/01 Apr 02 5600 5755 55755737 +7O 12/06/01 May 02 6250 632762056312 +27 12/06/01 Jun 02 6350 643063156425 +75 12/06/01 Julo2 6110 621060956190 +6O 12/06/01 Aug 02 6000 609559956095 +53 12/06/01 Oct 02 5310 532052905310 +23 12/06/01 Dec 02 5010 502049975000 unch Composite Volume Open_lnt 12/05/01 10018 30917 Live Cattle Date 12/06/01 Dec 01 6685 670566506675 12/06/01 Feb 02 6965 697569126930 12/06/01 Apro2 7190 720071477162 12/06/01 Jun 02 6887 688768426855 12/06/01 Aug 02 6882 688568606865 12/06/01 Oct 02 7070 707770607077 12/06/01 Dec 02 7205 720571357140 Composite Volume Open_lnt 12/05/01 11427 97304 Pork Bellies Date 12/06/01 Febo2 7410 755073507517 +llO 12/06/01 Mar 02 7375 754073107515 +153 12/06/01 May 02 7512 768575007677 +132 12/06/01 Jul 02 7720 772077007710 +l6O 12/06/01 Aug 02 7720 772075257720+150 Composite Volume Openjnt 12/05/01 775 2419 Once you have 10-25 percent of your 2002 milk supply locked up, you can hold off and hedge another 20-25 percent over the course of the year when prices look particularly favorable. That’s what some producers re cently did when they hedged Oc tober December 2001 milk earlier in the year. This strategy represents a good balance be tween “locking it all in at a bad price” and doing nothing and “riding the market.” For more information about forward contracting and hedg ing, consider reading a new Penn State report, “The Funda mentals of Forward Contract ing, Hedging, and Options For Dairy Producers In the North east.” To order, call Penn State at (877) 345-0691 and ask for report number UA359. 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. Open High Low Last Chge 0 " 8 „ Previ “ us 6 Volume Open_lnt 3871 8681 5397 14603 528 3991 45 1036 96 1383 45 484 2 317 13 351 21 69 Open High Low Last Chge P ™r ious Previous Volume Openjnt 4173 16821 4527 41285 1937 19463 589 12633 159 5018 32 1556 9 528 Open High Low LastCKge V^ ious J >rev ‘° u ® 6 Volume Openjnt 712 1998 58 259 2 117 3 37 0 7 Corn, No.2y 2.25 bu., 4.02 cwt. Wheat, N 0.2—2.58 bu., 4.31 cwt Barley, N 0.3 —1.53 bu., 3.27 cwt. Oats, N 0.2 —1.47 bu., 4.60 cwt. Soybeans, No. 1 4.07 bu., 6.80 cwt. Ear C0rn—62.91 ton, 3.15 cwt. Alfalfa Hay —123.75 ton, 6.19 cwt. Mixed Hay 119.25 ton, 5.96 cwt. Timothy Hay —121.75 ton, 6.09 cwt. Corn Belt Feedstuff St. Joseph, Mo. December 4,2001 Report Supplied By USDA CORN BELT FEEDSTUFF: Whole sale Bids. Truck or Rail dollars per ton. Feedstuff prices were mostly steady to slightly lower except for alfalfa By products. Demand was slow this week as mild weather returned and feed usage continued slow. Markets traded have been trading up and down on the Board. Inventories are adequate, despite the holiday closings. Alfalfa products, how ever, are tight and demand improved. SOYBEAN MEAL; 44 percent rail bids 3.00 to 4.00 lower at 149.00-153.00. 48 percent rail 4.00 to 5.00 lower at 157.00-161.00. Truck 44 percent 5.00 lower at 151.00-156.00. 48 percent 4.00 to 6.00 lower at 158.00-165.00 per ton. CORN BY-PRODUCTS: Gluten Feed 21 percent. Interior Points, 2.00 to 4.00 lower at 59.00-72.00; Chicago steady to 2.00 higher at 64.00-75.00. 60 percent Gluten Meal, Interior Points, steady at 250.00- Chicago steady to 2.00 lower at 255.00-265.00 per ton. Rail Hominy Feed, Central Illinois Points, steady at 61.00-62.00; truck steady at 60.00- Crude Corn Oil ISO points
Significant historical Pennsylvania newspapers