Could Milk Prices Stay Depressed for 2017?
While analysts have been hoping dairy markets are on their way up, this morning’s Global Dairy Trade auction could indicate otherwise. Today at World Dairy Expo we caught up with market analyst Mike North and he says it’s time to implement risk management options for 2017.
“Every market gets to a tipping point,” he says. “When you talk about what’s happened with GDT and powder trade declining again, that could be what we’re seeing.”
North says with the convergence between world and U.S. markets, it’s concerning to see them slip back. Today’s results could be an indicator that buyers will wrap up fourth quarter buying and be done.
What can you do to limit your market risk? North says it’s not too late to put some risk management strategies into place for the 2017 and the fourth quarter of 2016.
“At this stage in the game, fourth quarter is still a lost cause,” he says.
According to North producers can still lock in hedged milk for $15.50 and higher for the last quarter of 2016 and some contracts above $16 for 2017.
“As we look at 15.50 and higher prices, they are surely a lot better than what we got used to in 2016,” he says. “While it’s not the prices we hope for it’s certainly a lot better opportunity than wat we could see as we get to those quarters.”
North encourages producers to use options to allow them to take advantage of a price rally should one occur. “Leave yourself some room for potential changes in the market,” he says.