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March 14, 2016

Bleak Outlook for Milk Futures

 |  By: Anna-Lisa Laca

Last week brought plenty of negative news for the milk markets. While USDA did reduce the production forecast for the remainder of the year, the cut wasn’t enough to move milk prices higher. In addition, USDA announced the predicted all-milk price for the remainder of the year, which at $14.95 to $15.55 per cwt left most dairy farmers looking for risk management.

Unfortunately, they won't find it in futures contracts right now.

Robin Schmahl, hedge analyst with AgDairy, says 2017 contracts declined significantly last week. He says the futures saw losses in the double digits for several days.

“It seems like some of the hedgers were looking at some of the projected outlooks and realized it’s not looking that much better,” Schmahl says. “We’ve got Class III prices from January to May 2017 below $15 now. They are taking some of the premium out of the market that had been there before.”

Dairy market movement highlights:

Barrels: up $0.01.

Blocks: down $0.02.

Butter: down $0.0525.

NFDM: up $0.03.