Welcome to the Milk
Marketing
"Hedging
Web Site
2007 ended with an
average all milk price of $19.10! What’s
the likelihood for that to happen again?
One “expert” opinion based on the market fundamentals is predicting an
average all milk price of $16.95 for 2008.
Current prices are still very strong.
Now is the time to discuss a
“risk management” strategy with your advisors.
To be a good marketer one must
respect history as well as supply and demand.
The green, blue and purple lines depict historical class III prices
since 1988*. Green is the historical
class III average; blue the top historic average and purple the top one-third
historical average. As a guideline,
consider establishing a floor with a put option when the current price (red line) breaks the historic average (green line).
When current prices break the blue line
think about a hedge. A break over the purple line is a stronger signal to consider
hedging or perhaps forward contracting.
The historical class III average is simple a mathematical average of all
price since 1988. The top historical
average is an average of all the highest prices recorded for a given contract
month. The top one-sixth historic
average is a true statistical measure.
It is an average the highest prices one standard deviation above the
mean. Remember, one standard deviation
on either side of the mean captures two-thirds of all prices. The remaining third is divided in to the top
one-sixth and the bottom one-sixth.
Watch the 12 and 6 month futures
average milk price posted on the chart.
How do these prices compare to your milk plant or cooperatives 12 and 6
month contract prices?
*
Class III did not exist until recently.
Class III replaced the M-W (Minnesota-Wisconsin) price. Both pricing systems, however, reflect cheese
prices even thought they are calculated much differently. In a
These charts are updated on a daily basis, (Monday-Friday) after 3:30 PM CST.
Prices can change on a daily basis and producers should regularly check the markets to keep informed of any potential opportunities. Chart and data prepared by Jim Faust, UWEX Ag Agent, (715) 232-1636.
E-Mail any suggestions or inquiries to: Jim Faust
Calculating Your Milk Production Cost per CWT (simplified) Word Document
By: Jim Faust, UWEX Ag Agent, (715) 232-1636.
USDA's National Ag Risk Education Library
Daily Movement of Class III Milk Futures Prices
An Excel spreadsheet detailing
the daily percentage change of CME closing prices. You will need MS Excel
97 or greater to view this spreadsheet. Updated every weekday.
Web
Links to Milk Market Price Information:
............................Milk
Futures Settled Prices: CME
............................Milk
Options Settled Prices: CME
............................Cheese Daily Cash
Prices: CME
“BFP/MW/Class III Price Summary” 
By: Jim Faust, UWEX Ag Agent, (715) 232-1636
"Boston
Class I Announced Milk Price"
Check out this site for the
"Understanding Dairy Markets"
"WMMB Wislink" One stop URL for Dairy Information