 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
|
|
|
|
|
 |
 |
|
||
 |
 |
 |
|
|
Dairy Risk Management Services
Learn about the tools a growing number of dairy farmers are using to manage the price volatility of marketing milk
DFA’s Dairy Risk Management Services (DRMS) gives members the
opportunity to plan ahead by knowing what their Class III price will be
weeks, or even months, in advance. A variety of tools are offered to
help members better plan and budget by providing protection from the
unpredictability of prices.
Dairy Risk Management Services Tools
Fixed Price Forward Contract
- Allows you to fix a certain price – single month or multiple months (up to 24 months in the future).
- Average price over multiple months (3 or more consecutive months).
Fixed Price Forward Contract with Upside Rider
- Used in conjunction with fixed price contracts to capture a portion of an upside in the Class III market.
Minimum Price Forward Contract
- Protects against the Class III milk price falling below a “floor” price while allowing for the full upside potential in the Class III market.
Minimum/Maximum Forward Contract or “Min/Max”
- Establishes a floor price and a ceiling price in the Class III market.
Contracting with DRMS
- Members who decide to participate in the program will sign a master agreement which, at their option, gives them the right to participate.
- Contact DRMS to place your contract order. Contract transactions must be a minimum of 20,000 pounds per contract with additional increments of 5,000 pounds (i.e., 20,000, 25,000, 30,000).
- Contracts are limited to 75 percent of the member’s average monthly production.
- Production may be contracted on a per hundredweight basis for up to 24 months in advance.
When a member receives their milk check from DFA for the delivery
period of the contract, adjustments are made to the milk check
equal to the difference between the forward contract price and the
announced Class III price multiplied by the hundredweight volume
contracted.
Forward contracts are subject to basis risk. Basis risk for milk contracting is the difference between your gross pay price per hundredweight and the Announced Class III price. Your pay price includes many variables besides the Class III price, including the utilization within your market of the different classes of milk, premiums and/or discounts due to quality, volume, components, etc.
Logon to myDFA for examples of the tools offered to DFA Members.
For more information and market updates
CALL 1.877.424.3343
Press 1 for Spot Market Updates
Press 3 for CME Futures Settlement Prices
Press 0 for Information or to Place Orders