Pricing Adjustments May Increase Income (JAV)

Daily spot dairy prices have seen their share of volatility so far this year, but certainly not to the extent of what took place last year. Looking back at last year, we can see that much of the extreme volatility was due to the implementation of the Farmers to Families Food Box program. There were already challenges due to COVID-19 creating significant disruptions in the supply chain. The combination of all of these events pushed cheese prices to record highs in the month of July and then nearly back up there again in late October after a large drop from July into August. After the decline into November, cheese prices have generally remained in a sideways pattern of about 40 cents. The pattern of spot prices this year has been that any price strength has been short-lived. This has embedded a bearish attitude in traders that will be difficult to break. That is why milk futures have had a difficult time putting any premium, or keeping any premium, in futures. Price increases in underlying cash have many times been met with limited increases of milk futures as traders anticipated the return of lower prices. ...