High milk prices will allow john bos Jr. To construct a new free-stall barn and complete the partial remodeling of another one.

Yes, a work crew will yank the concrete out of an existing free-stall barn so that new lanes can be poured and sloped to allow for flushing. Currently, one of the lanes consists of a flat concrete slab that was originally poured 30 years ago — before the barn was built — and, then, when the barn was built over the slab, the slab just sort of stayed. For years, the work crew has had to go in and scrape the lanes rather than flush them. With a flush system, “we can eliminate a couple of hours a day scraping with a tractor,” Bos says.

A new free-stall barn will allow Bos to add another 90 cows to his herd — a herd that already numbers 500.

Adding more cows and boosting labor efficiency will help position the Modesto, Calif., dairy for the long-run. As Bos sees it, he’d be crazy not to take advantage of the higher milk prices while they last.

As this issue of Dairy Herd Management went to press, cheese prices continued their dramatic — and unprecedented — climb toward the $2-per-pound level for both blocks and barrels. On March 19, block cheddar cheese topped the $2 mark on the Chicago Mercantile Exchange for the first time ever. And, if cheese prices hold, it also sets up the prospect of Class III milk prices topping $18 per hundredweight.

Great news!

But, students of history know that everything is cyclical, and eventually milk prices will come down again. Some of the biggest bounces in milk prices in the past have been followed by equally breathtaking descents. For instance:

  • For almost four weeks — from Dec. 9, 1998 through Jan. 4, 1999 — block cheddar cheese sold for $1.90 per pound on the Chicago Mercantile Exchange. Then, in a precipitous drop, blocks fell all the way to $1.25 per pound by Jan. 20, 1999. Class III milk prices took a dive as well, falling from $16.27 in January 1999 to $10.27 in February 1999.
  • In late August 1999, block cheese prices traded briefly at $1.9725 per pound — a previous record high. Just seven weeks later, blocks had fallen to $1.185. The Class III milk price fell from $16.26 in September 1999 to $11.49 in October 1999.

We hope this time that high cheese prices stay around for a while. But, history shows us that when cheese prices fall, they fall sharply, and milk prices suffer as a result. 

Take this opportunity to better position yourself for future peaks and valleys.