Download PDF
April Margin Watch Summaries
With spring now firmly established across the country, attention has turned to planting progress and the outlook for this year’s crops. Thus far, weather conditions have been largely ideal across a broad area of the U.S. Corn Belt, and fieldwork is advancing quickly. While there is still a long growing season ahead, it is safe to say that optimism has prevailed over yield prospects and this has been evident in corn’s price trend recently. Moreover, advancing cases of bird flu are also having an impact on perceptions for forward feed demand. The latest Margin Watch reports discuss how these factors are having different impacts on the livestock and crop sectors as it relates to projected profitability into 2016.
Feature Article – Understanding PPD and Hedging Milk in Dairy Margin Management
One of the recurring concerns we hear from the dairy industry is how the producer price differential or PPD affects the milk price received by producers and how this risk can be protected in a margin management plan. Our feature article this month focuses on this topic and discusses how the dairy industry is unique with more than one benchmark representing the revenue side of their margin equation. “Understanding PPD and Hedging Milk in Dairy Margin Management” explores the difference between the uniform blend price a dairy producer receives for their milk and the futures price on the exchange. A thorough understanding of how a dairy is paid for the milk they market and how futures relate to this value as a benchmark and risk management tool can lead to more effective margin management decisions.