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Ex97
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Registered: 01-2004
Location: Northern Ireland
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Re: United dairy farmers Dec Auction


Having had a little time to ponder it, it occurred to me that perhaps the milk traded at 34ppl was never really worth that. Not hard to imagine really. It was probably hiked up by the rising commodities AND a panic fear of supply shortage on the buyers' part. Therefore, an approximate average of the price recieved then, and the price for the quantity returned and resold at 23p might be taken as 27/28ppl, which sounds a bit more sensible.

In the meantime, the next auction won't be good either as the buyers will still be sleeping christmas dinner off when its taking place. And the US has reportedly stepped up production which is countering a falling oceania supply.
11/12/2007, 21:03 Link to this post PM via Email   PM via Forum
 
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Ex96

Registered: 06-2003
Location: Augher
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Re: United dairy farmers Dec Auction


I took the opportunity to e-mail David Dobbin, and to my surprise got a prompt reply, I'll let you decide...

Dear William

Thank you for your e mail.

In responding to the points in your e mail, I must stress that the EU has moved away from managing the markets – export refunds are zero and intervention support is so low that it no longer offers any real support. A feature of an open seasonal commodity market is increased price volatility which is what we are now seeing.

This has been an exceptional period for dairy markets. Through the summer United’s auction prices increased steeply on the back of very strong commodity returns in powders and a tight milk supply which resulted from the very wet weather.

In August we achieved a record price in a United auction, with an average realization of 34.66ppl which was almost 6ppl above the July realization.

At present we are seeing the benefit of that strong auction and the results from the good October and November auctions in the current milk prices.

However dairy markets have moved sharply down in recent weeks especially in powder and butter. This is reflected in the cuts in Irish Dairy Board reference prices and has been widely reported across the dairy industry press. Most commodity buyers are covered into 2008 and current demand for powder and butter is low. The US and New Zealand have increased their output by 4% and 2% respectively and with a weak US dollar, US product is widely available in international markets including the EU. New Zealand is offering powder into the market at prices well below Dale Farm and other EU processors. The Fonterra milk price is around 20ppl yet United is selling in competition with Fonterra without any export refunds and is paying its members over 30ppl. And we have more milk to sell because the Northern Ireland milk supply has moved from being 6% down year on year in July to almost 3% ahead at present.

The current breakeven processing return for spot sales of milk powder is a milk equivalent price of circa 23.5 ppl. The auction has moved down sharply because it is following the market prices for powder and butter which have moved down sharply. The auction is an open and transparent selling method and just as it reflected the strong market demand and high returns in August it is now reflecting the weaker market demand and lower returns in December. Markets may pick up in the new year when New Zealand production will start to fall, but frankly we don’t know at present which way they will go. Much will depend on whether milk supply increases in 2008 at too fast a rate. I said this at the series of farmer meetings we have just held, one of which your father attended.

I can not speak for the beef industry or what beef farmers will do; we have done nothing in United to encourage them to switch to dairy. However they recognize the bleak outlook from their Taskforce report and see dairy as a much better opportunity.


Regards

David Dobbin
Dr David Dobbin CBE
Group Chief Executive
United Dairy Farmers Ltd



---
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12/12/2007, 14:17 Link to this post PM via Email   PM via Forum
 
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Re: United dairy farmers Dec Auction


quote:

mootoyou wrote:

I'm actually surprised it hasn't worked the other way....

Let's face it, there never has been a better time to sell (especially if your'e in an area with no BT restrictions)
With the price of milking cattle at a high anyone who is either near retirement age with nobody to follow on, or perhaps people who don't own their own farm has to seriously consider whether there will ever be a better time to sell.

The price of fresh calved cows/heifers has doubled compared to this time last year, the extra revenue this would bring to many if considering getting out must be an attractive factor.



As a tenant with a small dairy farm, when you work out what you would need to live off of were you not running a dairy with an agricultural rent on the house and the ability to manipulate some costs through the business before tax, getting out can soon look a worse option than carrying on.

We reckon we'd need 40k/year plus, which would be extremely difficult with one kid not at school yet. That would mean living in a smaller house somewhere in a town, and doing a job of necessity rather than the one we still enjoy doing most days.

12/12/2007, 14:50 Link to this post PM via Email   PM via Forum
 
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EX93

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Re: United dairy farmers Dec Auction


I heartily agree.

The other advantage of farming is that you have so little free time you don't need any disposable income!

Plus the standard of dress isn't expensive to maintain!

Then there is the flexible working hours... on a good day just put in your 16 hours - and the rest of the day is your own to do what you like with.
12/12/2007, 15:30 Link to this post PM via Email   PM via Forum
 
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Ex96

Registered: 11-2006
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United dairy farmers Dec Auction


But for those near retirement age or without anyone taking over the reins in the next few years, would they not be better getting out sooner than later?

What I am trying to say is will the cattle price ever be better?

12/12/2007, 15:41 Link to this post PM via Email   PM via Forum
 
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Ex97
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Registered: 12-2004
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Re: United dairy farmers Dec Auction


I agree with mootoyou, there are an awful lot of dairy farmers out there that are nearing retirement age with no successor. Coupled with that, the prospect of having to find £50K+ for upgrading slurry handling on many farms must look daunting.

If anyone is looking to sell up/retire in the near future, then I wouldn't like to gamble on there being a better time.

---
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12/12/2007, 20:11 Link to this post PM via Email   PM via Forum
 
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Ex97
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Re: United dairy farmers Dec Auction


Well, stock prices can only go one way from here. Kilrea mart didn't soften much on tuesday mind you. SFP came in. It, and the milk cheque every 20th seem to help trade along.

12/12/2007, 21:17 Link to this post PM via Email   PM via Forum
 
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Ex97
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Re: United dairy farmers Dec Auction


Despite a slight recovery last month, the March auction was, again, disheartening at a miserable 22.6ppl. Take roughly a penny off that for producer price.

20/3/2008, 20:46 Link to this post PM via Email   PM via Forum
 
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Ex97
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Re: United dairy farmers Dec Auction


We have been paid 21.5 base for april milk. Hopefully this is the bottom, but there will be at least two more cheques like this one. The auction for the next three months has taken a small step of 2p forward to mid-24ppl. Further climbs are needed to take us out this entirely uneconomic situation.

24/5/2008, 11:30 Link to this post PM via Email   PM via Forum
 
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Ex97
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Re: United dairy farmers Dec Auction


The united auctions seem to have peaked at 26.5 ppl, the last one being a penny lower. I therefore wouldn't be surprised if our spring price next year starts with a '1'.

Does anyone have any thoughts on that?

28/8/2008, 21:44 Link to this post PM via Email   PM via Forum
 


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