“What’s corn going to do?” and “Where’s milk headed?” These are top-of-mind questions for dairymen. While there have always been ups and downs, the past five years have felt more like Mr. Toad’s Wild Ride. From petroleum to feed to milk – it’s a big world out there and market volatility isn’t going away.
That’s one reason the Indiana Professional Dairy Producers (IPDP) – which has steadily added new members, with close to 250 Hoosier farms represented accounting for 65 percent of the state’s dairy cow population – put together a CME group tour earlier this summer hosted by Stewart-Peterson Inc . and BMO Harris Bank.
The Indiana Soybean Alliance sponsored the bus transporting 25 producers and a handful of lenders to Chicago. The tour was followed by a “power-hour” marketing discussion and dinner at nearby Union League Club.
“Don’t try to outguess the market,” said Brad Guse of BMO Harris Bank on risk management from a banker’s perspective. “Focus on an overall average price instead of getting caught up in each separate marketing decision. Look for the net effect because that number is so much more important to your business.”
Attendees asked good questions of presenters, which included a market analysis along with Mike Rusch, Randy Niemann and Matt Strelow of Stewart-Peterson. “The more comfortable producers become with how their prices get discovered, the easier it is to deal with the volatility and to make decisions,” Rusch said.
As for those top-of-mind price trend questions? The truth is: No one knows.
That’s why good marketing means to think differently, be engaged, and above all, be ready. Producers learned how being consistently engaged in planning their marketing helps them “fight the emotion” in their decisions. PD
Sherry Bunting is a freelance writer based in East Earl, Pennsylvania.
TOP RIGHT: Indiana Professional Dairy Producers (IPDP) members in front of CME Group in Chicago, Illinois. Attendees learned fewer people are physically in the pits due to 23-hour-a-day electronic trading: 90 percent of grain trades are done electronically compared with 70 percent of livestock, meat and dairy trades. CME Group makes it possible for companies to navigate risk and for speculators to take on risk by bringing together entities wanting to trade one financial position for another.
LEFT: IPDP president LuAnn Troxel asked how to overcome the emotional roller coaster of milk marketing.
RIGHT: Producers learned why successful marketing is a long-term process of staying consistent and focused on goals over time.
LEFT: “Risk management helps calculate the risk of doing something versus doing nothing,” said Brad Guse of BMO Harris Bank.
Photos courtesy of Sherry Bunting