Milk price risk management meeting announced
This meeting by Michigan State University Extension will help farmers understand the use of tools to manage that price movement
November 15, 2017 - Author: Phil Durst, Sr. Educator - Dairy & Beef Cattle Health and Production
Milk markets are down right now; when will they rise? Like the production and use of milk, the markets are not constant. That variation creates uncertainty, risk and opportunity.
Since August 2017, the high and low prices for the November Class III milk futures contracts have ranged almost $1.90 per hundredweight. The slide in prices took only 21 trading days as milk price tumbled from around $17.26 to $15.62. Then it turned around and gained almost $1 back in 5 trading days a week later.
How is a dairy farmer to plan? If just 30 days ago we looked at the markets for March 2018 Class III milk we would have projected a price of mid $15 milk ($15.40 – 15.60) price, but since then prices have slipped to below $15.00 as of Nov. 8. How can one even plan ahead?
These questions will be considered at the Dairy Price Risk Management Meeting hosted by Michigan State University Extension on Nov. 29, 2017. The meeting will be at Agro Liquid in St. Johns MI, from 10:00 a.m. – 2:30 p.m. The objective is to enable dairy producers to become more familiar and comfortable with using price risk management tools and equip them to develop strategies for the future.
It begins with knowing your cost of milk production, presented by MSU Extension Educator Kathy Lee. MMPA Director of Hedging and Business Development Aaron Beak will discuss the market tools of the future, option contracts and how to use them in different situations or in combinations.
A panel of brokers from three firms: Stewart-Peterson, Rice Dairy and FC Stone, moderated by Phil Durst of MSU Extension, will talk about market outlook and strategies to employ during times like this and when markets rise.
In the afternoon producers will work in small groups to develop market plans for six months and then run through some price scenarios to show the impact on prices received. Mitch Schafer of Greenstone Farm Credit Services will talk about using hedging accounts through a lender. We will also discuss the role of the milk co-ops as the intermediary in market contracts.
Registration is $30 per person or $20 for each additional person from the farm or business. Registration includes lunch and program materials. To register online go to http://events.anr.msu.edu/dairypricerisk or register with a check payable to “MSU”, sent to Huron County MSU Extension, 1142 S. Van Dyke Road #200, Bad Axe MI 48413.
The commodity markets are best used as a tool to help dairy farmers manage the risk of price movement. Price risk management is not speculative, in which risky positions are taken in order to profit from the markets. Rather, dairy farmers offset the risk of price movement. The Michigan State University Extension Dairy Team has designed this program to be practical, enabling dairy farmers to develop and implement a marketing plan for their milk.