Class 4 milk futures technical traders note Class 4 milk

Technical traders note Class 4 milk futures are forming an ascending channel, with near-term targets set at $19.55/cwt. Inflows from commercial hedgers show increased locking of Q3 and Q4 contracts to mitigate market uncertainty. Oh, Christmas Weed: Claymont Christmas Weed, a 30-year Delaware tradition, is celebrated at Saturday parade The conditions USDA refers to from over 20 years ago related to price inversions, rapidly changing markets and resulting competitive inequalities among dairy farmers have continued. A range in a price series provides insights on how volatile a price is. Larger ranges in price indicate high volatility while a smaller range would indicate lower volatility. As displayed in Figure 1, the range in Class prices within a year has exceeded $4 per hundredweight frequently since 2012. For example, the annual range in Class I prices has exceeded $4 per hundredweight in six of the past 12 years. The annual range in Class II prices has exceeded $4 per hundredweight in five of the past 12 years. The annual range in Class III prices has exceeded $4 per hundredweight in seven of the past 12 years. And the annual range in Class IV prices has exceeded $4 per hundredweight in four of the past 12 years. The average annual range in prices has exceeded 20% of the average final Class price for all Classes of milk, with Class III ranges exceeding 28% of the average final Class III price since 2012. Dairy farmers have dealt with wide and rapid spreads in prices that have contributed to income uncertainty and disruptions in their ability to manage risk. Forward pricing in Class 4 milk futures is firming as Q3 contracts near $19.50/cwt. Industry chatter points to possible milk supply disruptions in the Midwest, a factor traders are building into their risk models.