How can dairy manufacturing plants/farm operators control their price risk?
One of the ways today’s dairy industry differs from the industry that existed in the 1980-90’s is the increased availability and use of dairy related price risk management systems by dairy farm operators, manufacturers of dairy products and users of these dairy products. The most basic systems revolve dairy based futures and options contracts that are traded on the Chicago Mercantile Exchange. The Understanding Dairy Markets website has a collection of data and tutorials designed to enable the dairy industry obtain information and use this information to better manage their price risk. Daily futures data is available from the Understanding Dairy Markets website and options data is available here. A set of tutorials have been developed designed to provide a basic understanding of a variety of risk management strategies based on these markets. These tutorials can be found here.
