Blimling and Associates Blog

Agri-Mark Advances $2 Million in Payments to Farmers

Dairy Farmers React to Higher Milk Prices in PA 

New Zealand 2008-2009 Milk Production Estimated

Argentine Milk Production to Reach Record 1999 Levels in 2010

Glanbia Forced to Review Milk Price

Officials to Ask India to Accept US Dairy Products

Global Dairy Giants Vie for China's High-End Milk Powder Market

Many analysts are struggling to reconcile fizzy stock and commodity market valuations with economic conditions that seem far less carbonated. Among the many things we read day-to-day and week-to-week, the commentary from Bespoke Investment Group (a subscription service) often stands out for its level-headed approach and, at times, witty characterizations. A comment in a report published Friday works on both counts:

Investors typically have a way of quickly ratcheting up expectations so they become more difficult to exceed. Then once expec- tations on the economy begin to exceed reality (even as the reality improves) it sets the stage for disappointment. It’s sort of like how parents get all excited when a baby takes his first steps. It’s impressive at first, and everyone makes a big deal about it, but no sooner than the initial excitement wears off, the parents are expecting the kid to take out the garbage and do the dishes.

Were figuring things out as easy as plugging all of the right variables into a model... but the reality is that human beings are involved in every step of the "market making" process. As such, it is perilous to overlook the emotional dimension of markets.

Block cheddar cheese closed at $1.5000/lb, unchanged with no trades.

Barrel cheese closed at $1.4925/lb, unchanged with no trades.

Butter closed at $1.3500/lb, unchanged with one trade.

Grade A NDM closed at $1.3250/lb, unchanged with no trades.

Extra Grade NDM closed at $1.2700/lb, unchanged with no trades.

Today's editions of USA Today feature a story on the front of the "Money" section on prospects for sorely needed job creation. At least one survey is beginning to pick up some stirrings on that front, particularly in the service sector:

For the first time since the recession began, the portion of companies planning to add employees in the next six months outnumbered those expecting to cut jobs, according to this month's quarterly survey of economists at 78 firms by the National Association for Business Economics...Twenty-four percent plan to grow their workforce, 20% say they'll trim staff and 57% expect no change. In July, 18% expected to add workers, while 28% said they would scale back. "It's a little ahead of what I was expecting," says Ken Simonson, chief economist at the Associated General Contractors of America, who helped conduct the survey... Most bullish were services companies: 31% say they'll add workers in the next six months, up from 16% in an April survey. Just 3% say they'll cut staff. By contrast, 12% of manufacturers plan to beef up their workforces.

Prospects for lingering unemployment are, of course, a critical barrier on the road toward feeling better about the economy and consumer demand. Employment, we are often reminded, is a lagging indicator. But given that the recession has likely ended it is getting to be time to start seeing news along the lines highlighted in this survey.

Farmers Gather to Back Dairy Bill

Senate Committee Thinks Fonterra Drove a Hard Bargain on Milk Prices

China Demand to Drive Record Year for NZ Milk

Cheese Workers Lockout Over

Ron Kind: Time for New National Dairy Policy

Slump Recorded in Australian Dairy Cattle Exports

Dollars Start to Flow for Dairy Farmers

Block cheese closed at $1.5000/lb, up $0.0450/lb with 6 trades.

Barrel cheese closed at $1.4925/lb, up $0.0425/lb with no trades.

Butter closed at $1.3500/lb, up $0.0300/lb with 10 trades.

Grade A NDM closed at $1.3250/lb, unchanged with no trades.

Extra Grade NDM closed at $1.2700/lb, unchanged with no trades. 

Positive economic news out of the EU this morning, as private sector activity showed surprising strength. From the Financial Times:

Purchasing managers’ indices for the 16-country region showed output expanding for a third consecutive month and with the largest gain since December 2007. That suggested the growth rebound seen in the third quarter has continued into the final three months of the year.The unexpectedly strong results will boost hopes that the eurozone’s recovery is being sustained, with continuing government and central bank emergency actions helping avert a slide back into recession.However, the strengthening euro is worrying policymakers and signs are gathering that the turnround in Germany, the eurozone’s largest economy, is losing momentum.

Soft consumer demand and weak economic performance have been cited by media and anecdotal reports as having a negative impact on dairy product demand in Europe -- much as has been the case here in the US. But perhaps things are brightening some.

Or are they? These survey results were published at about the same time as news out of the UK that the economy there continued to contract in the third quarter. From The Wall Street Journal:

The U.K. economy saw a record sixth straight quarter of contraction between July and September, confounding economists' expectations that a deep recession was nearing an end and delivering a blow to the re-election hopes of Prime Minister Gordon Brown.In its preliminary estimate Friday, the Office for National Statistics said that output fell 0.4% in the third quarter from the previous one and was 5.2% lower from the year-earlier period."The third-quarter [gross domestic product] data are a real shocker and desperately disappointing," says Howard Archer, chief European economist at IHS Global Insight in London.

Dairy Woes Hamper Local Hay Industry

Cropp: Conditions Are Right for Better Milk Prices

India Must Regulate Supply of Milk and Products

Eric Watson Taking Aim at US Milk Market

Danone Sales Growth Accelerated

Dairy Looking to India

Dairy Farm in the Desert

Agland GM Optimistic About Dairy Industry's Future

According to the USDA/NASS Cold Storage Report, published at 2:00pm CT today:

September 30 AMERICAN-TYPE CHEESE stocks @ 607.1 million pounds, up 10.5% versus September 2008 and down 2.0% versus August 2009 (that compares to an average August-to-September decrease of 3.0% over the previous five years).

September 30  TOTAL CHEESE stocks @ 970.5 million pounds, up 16.3% versus September 2008 and down 1.5% versus August 2009 (that compares to an average August-to-September decrease of 3.6% over the previous five years).

September 30  BUTTER stocks @ 230.2 million pounds, up 23.2% versus September 2008 and down 11.3% versus August 2009 (that compares to an average August-to-September decrease of 13.2% over the previous five years).

For more information on what this might mean to the market, check your inbox.  Not a subscriber?  Request a free trial subscription.

Dairy cow slaughter for the week ending October 10 was 50,586 head, down 4.1% from the same week last year.

This puts slaughter up 243,000 head year-over-year, YTD through week 41.