MARKET WATCHMARKET WATCH DEC. CORN FUTURES SEEN BELOW $6.00 CRUDE OIL CLIMBING AGAINFEED

Mike NorthFirst Capitol Agmike@hedgebroker.comAn epic supply and demand

tug-of-war exists in the grain markets. Continued concerns over actual yields and harvested acres battle against growing concern over Euro zone debt and investors’ appetite for risk. As September unfolded, debt contagion had the upper hand on market direction as investors in all sectors moved to the sidelines or reduced exposure. September 30th was the release of the USDA quarterly stocks report, which added more than 200 million bushels to the beginning supply of corn as we begin another marketing year.

� e compounding eff ect of questionable economics and growing supplies sent corn down 40 cents (the newly expanded daily price limit). � is

move brought December corn futures below $6.00 per bushel for the fi rst time since the June break. � e soybean complex followed, taking November soybean prices below $12.00 per bushel and spot soybean meal below $300 per ton. Many of these prices represent the best prices that dairymen have had all year to capitalize on price.

Despite what seemed an unending supply of negative news for the grain markets, the move lower would come to an end very quickly. After the fi rst week of October, the market began rifl ing higher as investors and buyers of physical product alike viewed the recent sell-off as a new opportunity. Additionally, the USDA released their monthly Supply and Demand report revealing a decline in harvested corn

acres (500,000 acres) and soybean yield (from 41.8 to 41.5).

Current analysis suggests approximately 93 million acres will be devoted to corn production in the U.S. in 2012. Next year’s corn prices will have to remain historically high to motivate producers to accomplish that. Given the long list of potential economic crises, abrupt sell-off s are also likely. Use these opportunities to guard against paying the higher prices for physical product. Given the steep sell-off of late, now is a good time to make that happen.

� e Chinese economy has begun to cool some in recent weeks. Coupled with the recent price break in the U.S., this softening allows their buying arm to purchase foreign soybeans to restock

their reserves for times when fl at price and infl ation are a bit more heated. Remember that last year’s move higher was largely anchored by strong Chinese soybean purchasing. Of late, they have gained a greater interest in our product and will likely continue to do so until fresh supplies of South American soybeans come available in the spring. Amid the volatility, seasonality off ers some semblance of predictability about price. Generally speaking, the month of October is roughly the best time to book physical soybean meal and/or hedge pricing for the coming nine to 12 months. Use the recent break and harvest pressure to manage the logistics of this opportunity.

Investors will be cautious as they weigh the risk between opportunity in leveraged commodity assets and the bevy of economic black swans that trumpet in the distance. Fundamentalists will continue to talk of short supplies relative to existing demand and the need for greater acreage. � ere will be no shortage of price movement in the coming year. PD

8 Progressive Dairyman Issue 16 • November 1, 2011

PD MIDWEST MAIN PC

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Starting as low as

$ 1550

Soybean meal* ($/ton)

Oct. 14 Price 3-week change

CA $359 $7

ID $359 $4

*Price quotes contributed by Western Milling, J.D. Heiskell and United Cooperative.

Corn* (in tons) (in bushels)

Oct. 14 Price 3-week change

CA $287 $8

ID $281 $5

Price 3-week change

$8.04 .22¢

$7.87 .13¢

Oct. 14 Price 3-week change

CA $405 $54 ID $395 N/T

Cottonseed* ($/ton)

COMMODITIES

Supreme hay ($/ton)

Oct. 14 Price 3-week change

CO $230-$250 $20

IL $185-$210 NC

IA $180-$200 $10

KS $260-$275 $5-$30

MO $150-$190 NC

NE $170-$200 NC

VA $375 $40

PA $225-$320 $5

Source: USDA National Hay, Feed & Seed Summary

Dec2011

JulyMay Sept DecMar2012

Low

High

Settle$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

Oct2011

May July Aug Sept OctDec MarJan2012

High

Settle Low

$295$305$315$325$335$345$355$365

REGION

GAS DIESEL

Recent 3-week change

Yearly change Recent 3-week Yearly

change

East Coast $3.452 -.055¢ +0.641¢ $3.815 +.011¢ +0.743¢

Midwest $3.414 -.018¢ +0.607¢ $3.754 +.016¢ +0.691¢

Gulf Coast $3.301 -.008¢ +0.622¢ $3.726 -.004¢ +0.747¢

West $3.666 -.059¢ +0.699¢ $4.01 +.053¢ +0.761¢

California $3.864 -.023¢ +0.717¢ $4.053 +.014¢ +0.821¢

U.S. $3.476 -.033¢ +0.642¢ $3.801 +.015¢ +0.728¢

Nov2011

MayAprMarFeb June July Sept Oct NovAugDec Jan2012

Settle$80

$81

$82

$83

$84

$85

$86

DEC. CORN FUTURES SEEN BELOW $6.00 CRUDE OIL CLIMBING AGAIN

FUTURES

ENERGY

High: $6.91 Low: $5.49

High: $75.67 Low: $88.28

Corn (dollars per bushel)

Soybeans (dollars per ton) High: $346.00 Low: $297.50

Crude oil (dollars per barrel)

CornDec ’11 contracts $6.20 -.93¢ $6.52/$5.88Mar ’12 contracts $6.33 -.88¢ $6.66/$6.01

OCT. 19 Avg. 3-week settle High/Low

Soybean mealOct ’11 contracts $312.31 -$37.40 $328.40/$298.30Dec ’11 contracts $315.62 -$38.55 $330.50/$302.10

Source: USDA NASS Agricultural Prices report October 17, 2011

Source: Chicago Mercantile Exchange data

Source: U.S. Energy Information Administration

The chart above displays the amount of income a U.S. producer would have remaining after paying for feed to produce one hundredweight of fl uid milk at the current all-milk price.

Prices used to calculate ratioCommodity Current Change

Corn (bu) $6.69 -.19¢ Soybeans (bu) $13.10 -.30¢ Baled hay (ton) $196 $5.00 All-milk (cwt) $20.90 $-1.10 Source: USDA NASS Agricultural Prices report Oct. 2011

Oct2010

Jan2011

Mar Apr JuneMay July Aug OctNov Dec Feb

2010

$6

$7

$8

$9

$10

$11

$12

Oct. 2011: $10.36 High: $10.87 Low: $6.50

U.S. income over feed costs (per cwt)

Issue 16 • November 1, 2011 Progressive Dairyman 9

Roasting grains is the biggest breakthrough in livestock feeding that’s ever happened! Dilts-Wetzel’s new roaster utilizes a unique new concept that constantly and continuously produces evenly cooked beans. It will make a positive difference on your feed bill and on milk production.

989.875.4069www.diltswetzel.com e-mail: sales@diltswetzel.com

Raw soybeans before roasting Roasted soybeans

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“Your Livestock Will Love ‘Em and Demand Seconds”Dairymen are reporting these results when using roasted soybeans in dairy rations:• Increase in butter fat• Increased milk production on less feed• General improvement in herd health, appearance, less vet

expense, healthier calves.Improved results are also attained by roasting corn.

Cows fed whole heat-treated soybeans in early lactation produced about 800 pounds more milk per 305-day lactation than those fed soybean meal*.* According to a study at the University of Wisconsin-Madison.

Getting the Most Out of Your Soybeans

Contact us today!

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MARK ETWATCHOct. 14, 2011

Top Springer

Top Average

Medium Holstein Springer

ShortbredsOpen

Heifers Light

Open Heifers Heavy

HeiferCalves

BullCalves

Breeding Bulls

Empire Livestock - Burton MarketVernon, NY (800) 257-1819 (sale 10/10/11)

$1,450$50

$1,250 $50

$1,100 $150

$950$150

$300 $200

$700 $100

$100$50

$80$20

N/T

Mammoth Cave Dairy Auction, Inc.Smiths Grove, KY (800) 563-2131(sale 10/11/11)

$1,590 $100

$1,440 $20

$1,200 $20

$1,290$130

$410$100

$930$250

$150$30

$75 NC

N/T

New Holland Sales StablesNew Holland, PA (717) 354-4341(sale 10/12/11)

$1,875$225

$1,650$150

$1,375 $50

$1,250$50

$575$475

$900 $50

N/T N/T$1,300$150

Mid-Georgia Livestock AuctionJackson, GA (770) 775-7314 (sale 10/11/11)

$1,725 $75

$1,500 $125

$1,225 $50

N/T N/T N/T$150$60

$60 $20

N/T

Central Livestock AssociationAlbany, MN (800) 733-6828 (sale 10/14/11)

$1,475 $50

$1,375$25

$900 NC

$1,050 $275

$104/cwt$99/cwt $29/cwt

N/T N/T N/T

Equity Co-op LivestockStratford, WI (715) 687-4101Rocky Olsen (608) 434-4037 (sale 10/14/11)

$1,750$75

$1,475$50

$1,275NC

$1,225$25

$500$125

$900$175

$225$35

$145$20

N/T

Lake Odessa LivestockLake Odessa, MI (616) 374-8213(sale 10/11/11)

$1,900$50

$1,500$200

N/T $1,150$50

$650$50

$950NC

$300$100

N/T $1,200NC

Norwood Dairy Cattle AuctionNorwood, MO (417) 746-4242 (sale 10/13/11)

$1,625$50

$1,300$180

$1,025$50

$1,210$70

$590NC

$890$70

$200$45

$140$25

N/T

Pipestone Livestock Auction MarketPipestone, MI (507) 825-3306 (sale 10/15/11)

$1,650NC

$1,488NC

$1,428NC

N/T$153/cwt

NC$113/cwt

NCN/T N/T N/T

Spring� eld Livestock Marketing Center Springfi eld, MO (417) 869-9500 Doug Thomas (417) 840-9316 (sale 9/28/11)

$1,575$85

$1,385$35

$920 $80

$1,130$20

$400 $90

$1,000 $40

$170$30

$100 $55

N/T

Topeka Livestock AuctionTopeka, IN (206) 593-2522 (sale 10/11/11)

$1,635 $15

$1,225 $128

N/T N/T$1,120 $74

$1,585$15

$275NC

N/T$935$60

Tri-State LivestockSioux Center, IA (712) 722-0681Mike Koedam (712) 470-0198 (sale 9/21/11)

$1,550 $200

$1,440$160

$1,400 $80

N/T$145/cwt$15/cwt

$104/cwt $16/cwt

$320$45

N/T N/T

United Producers, IncMarion, MI (517) 294-3484 (sale 9/16/11)

$1,875$125

$1,725 $125

$1,400NC

$1,400NC

$500 NC

$1,050NC

N/T N/T N/T

Brush Livestock of ColoradoBrush, CO (970) 842-2801 (sale 10/6/11)

$1,860 $60

$1,785 $60

$1,695 $35

$1,385$115

N/T N/T N/T N/T N/T

Chehalis Livestock MarketChehalis, WA (360) 748-3191 (sale 9/30/11)

$1,375 $1,275$1,250

NCN/T

$475$305

$670$230

N/T$65

$10 $1,100$100

Producers LivestockJerome, ID (208) 324-4345 (sale 10/5/11)

$1,640 $40

$1,580 $40

$1,480 $20

N/T$119/cwt$10/cwt

$109/cwt N/T N/T N/T

Smith� eld Livestock AuctionSmithfi eld, UT (435) 563-3259 (sale 10/6/11)

$1,400$225

$1,300 $180

$1,250 $150

$750$100

$85/cwt NC

$111/cwtNC

N/T N/T N/T

Toppenish Dairy Replacement SalesToppenish, WA (509) 865-2820 (sale 10/11/11)

$1,500 $1,300

$1,250 $1,500 $108/cwt $76/cwt N/T N/T N/T

A & M Livestock Auction, Inc.Hanford, CA (559) 582-0358 (sale 9/21/11)

$1,850$75

$1,550NC

$1,350NC

$1,100$100

$150/cwtNC

$130/cwtNC

$110NC

$70$20

$1,050$50

Sulphur Springs Livestock and Dairy AuctionSulphur Springs, TX (903) 885-7739(sale 10/6/11)

$1,375$175

$1,050$50

$1,000$10

$840$85

$500 $160

$700$85

$220$90

$125 NC

N/T

Escalon Livestock Market, Inc.Escalon, CA (209) 838-7011(sale 9/14/11)

$1,600 NC

$1,350 $50

$1,250$50

N/T$100/cwt

NC$125/cwt

NCN/T N/T

$1,000NC

Contact Judy about being included in Progressive Dairyman’s Market Watch! judy@progressivedairy.com • (208) 324-7513 NC = No change N/T = No test Decrease in price Increase in price

Log on to www.progressivedairy.com to get auction reports from more locations!

MARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHCATTLE

NOTE: The colored bar represents cumulative year-to-date milk production. When it does not surpass the dotted line at the center of the box, it indicates state production is below the previous year’s total. When it does surpass the dotted line, it indicates production is above the previous year’s total.

Jan2011

Feb Mar Apr May June July AugDecOct NovSept2010

2010

2009

468

469

470

471

472

Texas435 NC

1,795 +5.9%781 +11.1%

6,394 108.6%

Minnesota471 NC

1,520 -4.7%716 -4.5%

5,986 96.9%

MARKET WATCHMARKET WATCH Texas adds 10,000 cows, leapfrogsMILK

Walt CooleyEditorProgressive Dairyman

Aug. 2011: 469 High: 471 Low: 471Milk cows (in thousands)

Texas’ overall milk production has been a runaway train since mid-2010, increasing this year alone by more than 8.6 percent over 2010’s milk production as of August. � e Lone Star state has most likely secured its position as the country’s No. 6 dairy state. It leads the former No. 6 state – Minnesota – by more than 408 million pounds of production at the end of August.

Texas’ explosion in milk production began in July 2010. Annual milk production in Texas was only 284 million pounds less than Minnesota in 2010, or about the average annual production of 14,500 Texas dairy cows. By the fi rst month of 2011, Texas was outproducing Minnesota and has expanded its lead progressively since then.

MINNESOTA HERD STATS

Jan2011

Feb Mar Apr May June July AugDecOctSept2010

Nov

2010

2009

1,450

1,500

1,550

1,600

1,650

1,700

Jan2011

Feb Mar Apr May June July AugDecOctSept2010

Nov

2010

2009

675

700

725

750

775

800

Aug. 2011: 1,471 High: 1,670 Low: 1,471

Milk per cow (in pounds, 30-day equivalent )

Aug. 2011: 693 High: 785 Low: 693Milk production (in million pounds, 30-day equivalent)

Aug. daily avg. milk per cow: 49.0 lbs.

For more information call 800-373-7234. Subscribe to our e-newsletter Nutrition Line at diamondv.com

*Data available at diamondv.com or 800-373-7234. ©2011 Diamond V Mills, Inc. All rights reserved. Diamond V® is a registered trademark and Original XPC™ is a trademark of Diamond V Mills, Inc.

Decades of research and hundreds of trials* clearly show Diamond V Original XPC™ is scientifically proven to deliver results – “Feed the Bugs, Fill the Tanks.” The nutritional metabolites contained in Original XPC™ foster rumen microbial performance. When rumen microbial populations thrive, feedstuffs are more effectively converted to individual nutrients. This improved digestibility means more available nutrients for milk, milk components and cow health. For performance and reliability you can count on, choose Original XPC™ year-round. Available in two additional concentrations.

Feed the bugs. Fill the tanksTM.

MICROBIAL FERMENTATION...

MY SECRET FOR GREAT MILK PRODUCTION!

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PPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRROOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOODDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOONNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

MICROBIAL FERMENTATION...

MY SECRET FOR GREAT MILK PRODUCTION!

CONSISTENTLY MORE MILK!

12 Progressive Dairyman Issue 16 • November 1, 2011

Most of the reason behind the change in ranking can be attributed to the state’s expanding dairy herd population. Since the beginning of the year Texas has added 10,000 cows to its herd. However, at the same time, milk production per cow in Texas is up 5.9 percent through September, while milk production per cow in Minnesota is down 4.7 percent.

� e Amarillo Globe-News recently reported on Texas’ surge in milk production. According to its report, the state’s dairy industry has about $1.5 billion in annual sales from milk.

“A lot of it is much larger herds,” Ellen Jordan, a Texas AgriLife Extension dairy specialist told the Globe-News. “You’re talking herds averaging 2,500 head on the High Plains and between 600 and 800 in Stephenville.” PD

U.S.9,217 +21,783 +1.1%

16,432 +2.1%

98,860 101.7%

Legend

Number of cows(in thousands)

Milk per cow(month)

(lbs.)Total milk

production (month)

(in millions of lbs.)

Year-to-date milkproduction (total)(in millions of lbs.)

Percentage of year-to-date production versus previous year-to-date

Monthly change(in thousands)

Annual percentchange

Annual percentchange

Minnesota to become No. 6 dairy state

95% 100% 105%

Jan2011

Feb Mar Apr May June July AugNovOct DecSept2010

20102009

405410415420425430435440 Aug. 2011: 435 High: 435 Low: 410Milk cows (in thousands)

TEXAS HERD STATS

Jan2011

Feb Mar Apr May June July AugDecOctSept2010

Nov

2010

20091,6001,6501,7001,7501,8001,8501,9001,9502,000

Aug. 2011: 1,737 High: 1,915 Low: 1,640

Milk per cow (in pounds, 30-day equivalent )

Jan2011

Feb Mar Apr May June July AugDecOctSept2010

Nov

2010

2009

650675700725750775800825850

Aug. 2011: 756 High: 816 Low: 680

Milk production (in million pounds, 30-day equivalent)

Aug. daily avg. milk per cow: 57.9 lbs.

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The Original Honey VacTTTTTTTTTTTTTTTTTTThhhhhhhhhhhhhhhhhhheeeeeeeeeeeeeeeeeee OOOOOOOOOOOOOOOOOOOrrrrrrrrrrrrrrrrrrriiiiiiiiiiiiiiiiiiiggggggggggggggggggggiiiiiiiiiiiiiiiiiiinnnnnnnnnnnnnnnnnnnaaaaaaaaaaaaaaaaaaalllllllllllllllllll HHHHHHHHHHHHHHHHHHHooooooooooooooooooonnnnnnnnnnnnnnnnnnneeeeeeeeeeeeeeeeeeeyyyyyyyyyyyyyyyyyyyy VVVVVVVVVVVVVVVVVVVaaaaaaaaaaaaaaaaaaaU.S. Patent Pending

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acy caccccccacaaVHHH VHHHHo VaVone Vyy VVHH ne HHoonneyyy aeoo VVne Vyy aaeeyoo VVnnHHHH yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy aaaaaaaaaaaaaaaaaaVVaaVVVVVVaaaaaaaaaaaaaaaaVaaVVVVVVVaaaaaaaaaaaaaaaaaaaaaaeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeooooooooooooooooooooooooooooooooooooooooo VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH ee aaaaoo VVeeeeeHHHHH VVVVHHHHHH eyeyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyeyeyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyey aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaVVaaVVVVVVVVVVVVVVVVaaVaVVVVVVVVaaaaaaaaaaaaaaaaaVVaaaaeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeneeeeeeeeeeeeeeeeeeeeeeeeeeeeeeooooooooooooooooooooooooooooooooooooooooo VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaooooooooooooooooooooooooooooooooo VVVVVVVVVVVVVVVVVVVVVVVVVVeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee aaaHHHHHHHHHHHHHH ee ccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc®®®®®®®

UU.S. Patent PeendingU.S.U SU.S. Pate. Patent nt Pendingdingng

Sizes: 420-2100 cu. ft.

Vertical and Horizontal

Auger MixersTruck, Trailer,

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Issue 16 • November 1, 2011 Progressive Dairyman 13

Feb Mar Apr May July AugJune Sept OctDecNov2008

Feb Mar Apr May June July Aug Sept Oct Nov DecJan2009

Feb Mar Apr May June July Aug Sept Oct Nov DecJan2010

Jan2011

CA Class 1 price

Federal Class I price$8

$10$12$14$16$18$20$22$24

MARKET WATCHMARKET WATCH SLUGGISH DEMAND WEIGHING ON MARKET BUTTER EXPERIENCES UPTICKDAIRY PRICES

Katie KrupaRice Dairy LLCklk@ricedairy.com

Oct. 2011: $21.77 High: $23.84 Low: $11.40Oct. 2011: $19.56 High: $21.78 Low: $9.43Fluid milk prices (in dollars)

October saw some turbulent weeks in the dairy markets; although the markets haven’t changed drastically, there has been a lot of up and down in the market. � e October – December 2011 average Class III futures price has oscillated between $16.60 and $17.60. In the past three weeks, November has been the most volatile with the price moving between $16.41 and $17.78 and trading over a 50-cent range (diff erence between the low and high trading price of the day) in eight out of 15 days towards the end of October. Volatility may continue to be range-bound as the market struggles to fi nd stable footing between the $16.50 and $17.75 price range. � e 2012 price has experienced some weakness moving from $16.80 to around $16.60, but has been relatively stable in recent weeks. � e price for the fi rst half of 2012 has lost about 40 cents in recent weeks, and these months may experience an increasing amount of volatility if the market continues to oscillate.

� e spot cheese market and the Class III futures have been singing a similar tune. Both the block and barrel prices have moved higher and then lower but seem to be comfortable trading within a price range. � e spot cheese prices have roughly been trading in a price range between $1.65 and $1.79.

Weighing on the market has been sluggish demand and growing milk production. � e commercial disappearance of milk in all products as reported by the USDA is down an average of 1.6 percent over the past three months. While demand is slowing, domestic milk production is increasing, up 2.1 percent in the most recent USDA Milk Production report. Additionally, New Zealand’s spring fl ush is being reported at record-high levels, which will most likely hurt our export markets to some degree.

While the milk price outlook is looking less optimistic, the milk-feed margin is still decent. � e milk-feed margin (milk price – feed costs) that I analyze has a 50th percentile price of $9.00. � e current trading price for the milk-feed margin is around $9.20 for October – December and around $8.60 for 2012. Admittedly these prices are nothing fantastic, but they could be enough to return a profi t. Recent softening in feed prices has kept the 2012 milk-feed trading at decent levels. Being optimistic, there are risk management opportunities to protect your milk and feed prices and your business for the upcoming year,and, although it’s not at record profi t levels, your business can still be profi table. PD

The Norwegian Red (NRF) daughter pregnancy rate

is highest for ALL breeds in the U.S. - - average NRF X

Holstein is 5.9% higher than Holstein!

August 2011 USDA genetic evaluations

with Norwegian Red

Norwegian Red x Jersey x Holstein:

Improved Fertility

Increased Survival

Improved Mastitis Resistance

Improved Calving Performance

Improved Resistance to Other Diseases

Increased Percentages of Fat & Protein

3

3

3

3

3

3

CROSSBREEDINGMANAGEMENT SYSTEM

Option #1 Jersey Sire x Holstein Cow

Option #2 Norwegian Red Sire x Holstein Cow

H

H:50%N:50%

H

H:25%N:25%J: 50%

H:62.5%N:12.5%J: 25.0%

Start Rotation over with N Sire on HxJxNxH cow

N

J

H J

H:50%J:50%

H

N

H:25%J: 25%N:50%

H:62.5%J: 12.5%N:25.0%

Start Rotation over with J Sire on HxNxJxH cow

CMS® is a three-breed rotational

crossbreeding program recommended

by ABS that utilizes the Holstein, Jersey

and Norwegian Red breeds.

1st Lactation Norwegian Red x (Jersey x Holstein)

3rd Lactation Jersey x (Norwegian Red x Holstein)

2nd Lactation Norwegian Red x (Jersey x Holstein) All pictures from a U.S. herd utilizing the CMS® program

Several top NRF bulls are polled, including homozygous polled (all offspring will be polled).

To order Norwegian Red semen,

contact your local ABS representative

or call 1-800-ABS-STUD in the U.S. or

1-800-STJ-STUD in Canada

14 Progressive Dairyman Issue 16 • November 1, 2011

Oct2009

Feb Mar Apr May June July Aug SeptNov Dec Jan2010

Feb Mar Apr May June July Aug Sept Oct Nov Dec

Futures2011 2012

Jan2011

2013

$11

$13

$15

$17

$19

$21

$23

SLUGGISH DEMAND WEIGHING ON MARKET BUTTER EXPERIENCES UPTICK

Class III (in dollars)

10/1/11

10/15/11

7/2/11

8/6/11

9/3/11

10/23/10

11/6/10

12/4/10

1/1/11

2/5/11

3/5/11

4/2/11

5/7/11

6/4/11

20102009

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50 Oct. 15, 2011: $1.81 High: $2.23 Low: $1.24Butter (weekly average in dollars)

10/14/11

10/17/11

9/29/11

9/30/11

10/3/11

10/4/11

10/5/11

10/6/11

10/7/11

10/10/11

10/11/11

10/12/11

10/13/11

9/27/11

9/28/11

$1.65

$1.70

$1.75

$1.80

$1.85

$1.90Over the past three weeks the butter price has risen from a price of $1.76 to a price of $1.8350 as of October 14. The increase came after a steady decline that took the butter price from around $2.10 to $1.76 during the month of September.

AprMarFebNov Dec Jan2011

May June Aug SeptJulyOct2010

2009

2010

$1.00$1.10$1.20$1.30$1.40$1.50$1.60$1.70$1.80

Sept. 2011: $1.60High: $1.74 Low: $1.29

Non-fat dry milk

2009

2010

$1.20

$1.45

$1.70

$1.95

$2.20

10/1/11

10/15/11

7/2/11

8/6/11

9/3/11

10/23/10

11/6/10

12/4/10

1/1/11

2/5/11

3/5/11

4/2/11

5/7/11

6/4/11

10/14/11

10/17/11

9/29/11

9/30/11

10/3/11

10/4/11

10/5/11

10/6/11

10/7/11

10/10/11

10/11/11

10/12/11

10/13/11

9/27/11

9/28/11

$1.75

$1.77

$1.79

$1.81

$1.83

$1.85

Oct. 15, 2011: $1.81High: $2.16 Low: $1.27

Cheese (weekly average in dollars)

There has been some mild volatility in cheese market in recent weeks. The block price was trading around 1.72, then moved up about 5 cents before moving about 8 cents lower. Similarly, the barrel price was down around $1.65, then moved up about 13 cents before moving 10 cents lower.

Sept. 2011: $21.67 High: $21.67 Low: $9.31

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Issue 16 • November 1, 2011 Progressive Dairyman 15