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Four helpful tools farmers can use to track market trends


The average milk price for 2014 hit an all-time high and feed prices were moderate, resulting in a very profitable year for dairy farmers.  Ag economists are projecting an average all milk price of $18/cwt for 2015 or roughly $5.50 less than the 2014 milk price.  Feed prices may soften some in 2015 but it appears that dairy farm profit margins will tighten.

Even with lower milk prices and tighter feed costs, there are opportunities to increase income over feed cost on your farm.  Dr. John Goeser from Rock River Laboratory and I recently had a discussion about some of the tools we recommend dairy farmers use to navigate the volatile markets they encounter.  One area we find is often overlooked is the wide array of information on markets and market trends that can help a dairy farmer understand the factors that are at play in the marketplace. This information can help farmers make informed decisions and position themselves to respond to market signals in a way that will encourage profitability even when margins are tight.

There are many different sources of information available on market trends in both commodities and milk prices.  A few of our favorites are listed below.

Dr. Goeser’s  recommendations:

1. Companies that specialize in the trade of futures contracts in milk, corn, and soybeans can be a valuable resource.   One example is Commodity and Ingredient Hedging, they publish a report called the Margin Manager Newsletter.   In their December Dairy margin watch report they discuss the tightening dairy margins and factors that are impacting dairy margins including market conditions in China and New Zealand.  They offer free subscriptions to this report.

2. Another one of John’s favorites is a blog titled “milk price” which offers insightful information on factors that influence Federal Milk Marketing order prices.  In their recent posts they have examined how increased supplies of dairy products in major exporting regions including Europe and New Zealand have impacted the world price for dairy products.   This trend has been occurring for several months and is influencing the price of milk in the United States.

Dr. Bascom’s  recommendations:

1. The University of Wisconsin offers a set of resources to aid in the understanding of dairy markets including:  daily reports from the CME, several different reports on the market outlook, and world supply and demand estimates.   This information examines numerous factors that are impacting milk prices as well as factors that will influence the futures price of Class III milk.

2. Several times each week Dairyline offers a 5 minute audio clip that covers a variety of topics and current events that are influencing milk prices.  This is a quick reference on timely topics.  For producers who can’t commit a lot of time to reading market reports, Dairyline offers a concise daily report on factors that are influencing the dairy markets.

Farmers that utilize and understand this information can make prudent decisions on how they will respond to trends in the marketplace, and in many cases take proactive steps that improve their bottom line.   There are numerous resources that can be used to keep up-to-date of trends in markets.   Producers that use this information to make informed decisions are more likely to be prepared when market conditions change.  The coming year appears to be one where margins will contract.  Are you Going Beyond Nutrition to utilize market information to help remain profitable in a changing market?

Source: Agri-Nutrition Consulting


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