December 13, 2016

Farmer Optimism, Markets Soar

 |  By: Anna-Lisa Laca

Dairy farmer optimism soared yesterday with the futures market. At one point in the morning markets shot up rapidly, according to Mike North of Commodity Risk Management. “It was spurred further by a higher trade in spot cheese prices,” he says. “However, prices began moving higher promptly when pits opened yesterday.”

North reminds farmers the fundamentals do not immediately justify yesterday's price, but says “the bias in the market seems to be shifting.” 

“While this brings hope to dairyman, it is important to remember that while bias in milk might be shifting, prices in products must also shift to support the movement,” he says. “Otherwise this is still just a bunch of market hype.”

What can you do to take advantage of the rally? Look at some marketing strategies to lock in a profit. “We prefer option strategies to maintain flexibility for whichever outcome we inherit,” North says. “To that end, be looking to purchase put options.”