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Kansas Agricultural Experiment Station Research Reports
1996; Kansas Agricultural Experiment Station contribution; no. 97-115-S; Report of progress (Kansas Agricultural Experiment Station and Cooperative Extension Service); 771; Milk futures; Hedging
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Futures Contracts For Milk: How Will They Work? (1996), Bob Cropp
Futures Contracts For Milk: How Will They Work? (1996), Bob Cropp
Kansas Agricultural Experiment Station Research Reports
The two new milk futures contracts offer dairy farmers and other buyers and sellers of milk and dairy products additional opportunities to manage price risk in an increasingly volatile milk price environment. The availability of these risk management tools is especially important given the market-oriented direction of federal dairy policy. The CSCE and CME contracts differ somewhat in their specifications. Potential hedgers will need to evaluate which offers the best opportunity to lock in prices. Hedgers also should look at the cheese and nonfat dry milk contracts in determining the most appropriate risk management strategy. Strategies may involve using more …