marketing basics dipping your toe in the shallow end of the marketing pool kevin bernhardt...
TRANSCRIPT
![Page 1: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/1.jpg)
Marketing BasicsMarketing BasicsDipping Your Toe in the Shallow Dipping Your Toe in the Shallow
End of the Marketing PoolEnd of the Marketing Pool
Kevin BernhardtKevin BernhardtUW-Extension and Center for Dairy ProfitabilityUW-Extension and Center for Dairy Profitability
January 27, 2010January 27, 2010
![Page 2: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/2.jpg)
2
![Page 3: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/3.jpg)
3
![Page 4: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/4.jpg)
4
![Page 5: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/5.jpg)
5
![Page 6: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/6.jpg)
6
![Page 7: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/7.jpg)
7
![Page 8: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/8.jpg)
8
![Page 9: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/9.jpg)
Farm & Risk Management Team
© 2008
Outlook
• Better than 2009• … logic leads one to believe that all
commodity prices will be lifted, including dairy, but buyers and sellers of dairy commodities should be advised that the outlook for 2010 is uncertain at the moment, with differing viewpoints (Ken Bailey, Feedstuffs, Dec 14)
9
![Page 10: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/10.jpg)
Farm & Risk Management Team
© 2008
Agenda
• Motivation• Basic Marketing Tools and Strategies
– Advanced Strategies - Awareness
• Marketing Plan Basics • Practicing our Marketing Savvy!
10
![Page 11: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/11.jpg)
Farm & Risk Management Team
© 2008
The Importance of Timing[Person 1] • July 2008: Input prices at record highs, but
they are just going higher. People are talking: – $10-12 corn, $600/ton SBM, – Nitrogen is already at $1,200/ton.
• I’m locking in my Corn and SBM for first quarter 2009 before it gets any higher.
– $8.00/bu corn $430/ton SBM
11
![Page 12: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/12.jpg)
Farm & Risk Management Team
© 2008
The Importance of Timing[Person 1] • Still July 2008: March 2009 Milk prices are
great too, but…….. – New Zealand is in a drought, – It’s hot in California, and – Europeans are buying.
• People say milk will get to $25 before it is over.
I’m waiting!
12
![Page 13: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/13.jpg)
Farm & Risk Management Team
© 2008
The Importance of Timing[Person 1] • September 2008: Milk prices have really
slid to about $15.50.
But, it’s a correction and the market needed a correction. I’m going to wait now until prices come back.
Besides, I kinda locked in those feed prices at the wrong time and I need a higher milk price to make it pay.
13
![Page 14: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/14.jpg)
Farm & Risk Management Team
© 2008
The Importance of Timing[Person 1] • March 2009: I’m feeding $8.00 corn and
$430/ton SBM. Milk price turned out to be $10.44. I never did lock in my milk price.
• Profits: - $120,000 (Return M&L)
14
![Page 15: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/15.jpg)
Farm & Risk Management Team
© 2008
The Importance of Timing[Person 2] • I forward contracted my March 2009 milk
in May 2008 at $16.50/cwt (could have had more if I had waited awhile).
• At the same time, using marketing tools, I assured a ceiling cost for corn of $5.35 and $338.50 for SBM.– $5.25 CALL for $.10/bu – 330/ton SBM option for $8.50/ton.
15
![Page 16: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/16.jpg)
Farm & Risk Management Team
© 2008
$3.85
The Importance of Timing[Person 2] • March 2009 Market Prices:
Corn = $3.75 SBM $311.50 – My protected ceiling price turned out to not be
needed. After adding the cost of having that protection my feed costs are:
• March 2009 Profits: $74,925$74,925
16
$320
![Page 17: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/17.jpg)
Farm & Risk Management Team
© 2008
17
My Own Real Life Example
• It’s April 9, 2004– November 2004 Forward Contract is available
at $13.68– December 2004 F.C. is available for $12.90
• That is a top 25th percentile price for both months and well above blue ribbon price.
• Pull the trigger and sell!!!!
![Page 18: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/18.jpg)
Farm & Risk Management Team
© 2008
18
My Own Real-Life Example
• As of December 8th, – November announced at $14.89
“LOSS” OF $1.21/cwt.
– December settled at $16.55 “LOSS” OF $3.65
![Page 19: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/19.jpg)
Farm & Risk Management Team
© 2008
19
Another Real-Life Example
• It’s July, 2008• The word’s out that milk is going to
$25/cwt. • I slammed my fingers in the drawer at $17,
$18, and $19. • Finally Forward Contracted for next 18
months at $19.91.
![Page 20: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/20.jpg)
Farm & Risk Management Team
© 2008
20
Another Real-Life Example
• How much did I pay for feed, fertilizer, and fuel?
• I only did 25% of my production!!
Announced Marketing Gain
Jun 20.25 -.34
Aug 17.32 2.59
Oct 17.06 2.85
Dec 15.28 4.63
Feb 9.31 10.60
Apr 10.78 9.13
Jun 9.97 9.94
Aug 11.2 8.71
Oct 12.82 7.09
![Page 21: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/21.jpg)
21
Which Type of Marketer Are You?
Both Forward
Contracted for $18.00
Announced Price Was
$20.07
Cool!I’m getting a great return
on my investment
#@%$^& I lost
$2.07!!!
And could
have had $21.25
![Page 22: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/22.jpg)
WHEN IT COMES TO WHEN IT COMES TO MANAGEMENT, WE ARE MANAGEMENT, WE ARE
NOT ALL THE SAMENOT ALL THE SAME
MANAGEMENT MANAGEMENT MATTERSMATTERS
![Page 23: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/23.jpg)
19,000 21,000 23,000 25,000
10 (143,977) (123,977) (103,977) (83,977)
11 (124,977) (102,977) (80,977) (58,977)
12 (105,977) (81,977) (57,977) (33,977)
13 (86,977) (60,977) (34,977) (8,977)
14 (67,977) (39,977) (11,977) 16,023
15 (48,977) (18,977) 11,023 41,023
16 (29,977) 2,023 34,023 66,023
17 (10,977) 23,023 57,023 91,023
18 8,023 44,023 80,023 116,023
23
Production Matters
Price Matters
$137 hay, $4.00 corn, $300 SBM
Return to Management and Labor
![Page 24: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/24.jpg)
-15% -10% -5%23,000
Avg 5% 10% 15%
10 (85,938) (93,206) (101,166) (109,923) (119,117) (128,311) (137,505)
11 (62,938) (70,206) (78,166) (86,923) (96,117) (105,311) (114,505)
12 (39,938) (47,206) (55,166) (63,923) (73,117) (82,311) (91,505)
13 (16,938) (24,206) (32,166) (40,923) (50,117) (59,311) (68,505)
14 6,062 (1,206) (9,166) (17,923) (27,117) (36,311) (45,505)
15 29,062 21,794 13,834 5,077 (4,117) (13,311) (22,505)
16 52,062 44,794 36,834 28,077 18,883 9,689 495
17 75,062 67,794 59,834 51,077 41,883 32,689 23,495
18 98,062 90,794 82,834 74,077 64,883 55,689 46,495
24
Input Costs Matter
Increase in Feed CostsDecrease in Feed Costs
![Page 25: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/25.jpg)
ROROE (mrkt basis w economic depreciation)CDP: 100-250 Cow Dairies in WI (freestall, no pasture, not organic)
-10
-5
0
5
10
15
20
25
2006 2007 2008
Low 25%
Middle 25%
High 25%
![Page 26: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/26.jpg)
Farm & Risk Management Team
© 2008
Management Matters
• 110 MN and WI farms, Average of 2006 and 2007
26
Bottom 20%
20-40% 40-60% 60-80% Top 20%
Net Ret. 7,737 22,232 52,427 39,856 110,988
Acres 340 308 407 237 416
Yield 164 165 178 174 183
Direct Exp.
385 387 392 376 372
![Page 27: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/27.jpg)
Farm & Risk Management Team
© 2008
Volatility in 2008-09 was Unprecedented• How many of you think this volatility will
happen sometime again?• How many of you think that volatility may
be less than this wild time, but still at a level where profit margins can swing significantly?
• My guess is your shaking your heads “YES”
27
![Page 28: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/28.jpg)
Farm & Risk Management Team
© 2008
What Are The Lessons?
• Timing is important.• It’s the margin (difference between price
and costs) that counts.• We need a mindset that manages for
profitability and risk - not the homerun• Volatility is a fact of life (output and inputs)• Management matters
28
A Great Deal
![Page 29: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/29.jpg)
Farm & Risk Management Team
© 2008
29
Basic Marketing Tools and Strategies
A Review
Farm & Risk Management Team
© 2005
![Page 30: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/30.jpg)
Two Markets
• Two Different Markets– Cash:
What you are in every day when you produce and sell milk
– Futures: What you can choose to be in if you buy and sell Futures
or buy and sell Options on the Chicago Mercantile Exchange
You do not need to be a producer. You do not need to own a single cow. Anyone can be a farmer in the futures market!!!!
30
![Page 31: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/31.jpg)
Farm & Risk Management Team
© 2008
31
Tools in the Marketing Toolbox
Cash MarketForward Contract
Minimum Price Contract
Futures MarketFutures Contract
PUT OptionCALL Option
And all kinds of combinations of the above!LGM-Dairy
![Page 32: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/32.jpg)
Farm & Risk Management Team
© 2008
Forward Contract (Cash Market)
• Transaction with your milk buyer for a contracted quantity and price– You must deliver– You will get the contracted price
(nothing more – nothing less– 3rd party risk– Contracted price is futures price less a premium– No broker, no broker’s fee, no margin account
32
![Page 33: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/33.jpg)
Farm & Risk Management Team
© 2008
Futures Contract (Futures Mrkt)
• Transaction through a broker with the Chicago Mercantile Exchange– Sell a futures contract for a set price and quantity
(200,000 or 100,000 lbs)– Has nothing to do with your physical production
and nothing to do with what your milk plant pays you
You don’t even have to have any cows!
– But, it will connect in the end to lock-in a price
33
![Page 34: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/34.jpg)
Farm & Risk Management Team
© 2008
Futures Contract (Futures Mrkt)
– You must pay a broker’s fee– You must maintain a margin account– You may get margin calls
Market moves up $.25 one day, then you may have to send the broker a check for $500 (.25*2000 cwt)
If mrkt moves down you receive $500
– You can get out of the contract at any time.– There is no physical delivery requirement
34
![Page 35: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/35.jpg)
35
You
Local Broker
CME
Pit/Trading Floor
Other Party
![Page 36: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/36.jpg)
Margin Account!!36
Margin Account
![Page 37: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/37.jpg)
Farm & Risk Management Team
© 2008
PUT Option (Futures Mrkt)
• Buying a PUT Option gives you the right to sell a futures contract at a set price, but not the obligation. You pay a premium for this right.
[Protects against the risk of falling prices]
37
![Page 38: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/38.jpg)
Farm & Risk Management Team
© 2008
CALL Option (Futures Mrkt)
• Buying a CALL Option gives you the right to buy a futures contract at a set price, but not the obligation. You pay a premium for this right.
[Protects against the risk of rising prices]
38
![Page 39: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/39.jpg)
Farm & Risk Management Team
© 2008
39
Basic Strategies (2 Basic Strategies & 2 Tools)
1. Lock-in a known price. The price you set is the price you will get.
1. Forward contract with your milk buyer
2. Sell a futures contract on the CME
2. Set a Floor price. You will get no less than the floor price, but you may get more.
1. Minimum price contract with your milk buyer
2. Buy a PUT option on the CME
![Page 40: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/40.jpg)
Farm & Risk Management Team
© 2008
0102030405060
9.35 10 10.23 12 13.51 15 16.8 18 21
40
15.35
- Forward Contract with milk buyer, or- Sell June futures contract at CME for 15.35
Basic Strategy 1: Lock It In!
![Page 41: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/41.jpg)
Farm & Risk Management Team
© 2008
41
• By Selling a Futures Contract
Advantages
1) Achieves a “specific” price or profit objective
2) Can get out if markets change
3) Not tied to a milk buyer
Disadvantage:
1) Margin account and calls
2) Forgo higher prices
3) 200,000 lb. Contracts
• By Forward ContractingAdvantages:1) Achieves a “specific” price or
profit objective2) Flexible in terms of quantities
of milk to contract3) Simple to use4) No margin account or callsDisadvantages:1) Locked into a milk buyer2) Can’t get out of contract if
markets change, must deliver!3) Forgo higher prices
Locking In a Price
![Page 42: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/42.jpg)
Farm & Risk Management Team
© 2008
42
Let’s Practice Selling Futures
• May Futures are trading at $14.75 – What price position have you secured for 200,000 lbs
of milk in May?
Always Ask and Answer – Always Ask and Answer – “What am I doing to myself?”“What am I doing to myself?”
($14.75)
![Page 43: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/43.jpg)
May Milk Announced at $17.0043
Jan 21 Sold milk on futures market for:
May Sell my milk to the milk plant for:
May Cash settled (buy back) futures at:
My base price before brokers fees
+14.75
+17.00
-17.00
+14.75
![Page 44: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/44.jpg)
May Milk Announced at $12.0044
Jan 21 Sold milk on futures market for:
May Sell my milk to the milk plant for:
May Cash settled (buy back) futures at:
My base price before brokers fees
+14.75
+12.00
-12.00
+14.75
![Page 45: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/45.jpg)
Forward Contract May Milk Announced at $17.00
45
Jan 21 Forward contract May milk for $14.45 (14.75-.30):
May Sell my milk to the milk plant for: +14.45
![Page 46: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/46.jpg)
Forward Contract May Milk Announced at $12.00
46
Jan 21 Forward contract May milk for $14.45 (14.75-.30):
May Sell my milk to the milk plant for: +14.45
![Page 47: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/47.jpg)
Farm & Risk Management Team
© 2008
0102030405060
9.35 10 10.23 12 13.51 15 16.8 18 21
47
Basic Strategy 2: Set a Floor Price
- Minimum Price contract with milk buyer, or- Buy a PUT Option at the CME (15.25 strike price for $.79) for a floor of $14.46
14.46
![Page 48: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/48.jpg)
Farm & Risk Management Team
© 2008
48
Let’s Practice: Setting a Floor Price via Buying a PUT Option
• Buy a $15.50 July PUT Option for $.62– What price position have you secured for
200,000 lbs of July milk?
$14.88 minimum (15.50-.62)
Always Ask and Answer – Always Ask and Answer – “What am I doing to myself?”“What am I doing to myself?”
![Page 49: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/49.jpg)
May Milk Announced at $17.0049
Jan 21 Purchased right to sell milk for $15.50, but I don’t have to (PUT). My cost for that right (premium):
May Sell my milk to the milk plant for:
May I have the right to sell milk for $15.50 and buy back for $17.00. Thanks, but no thanks (PUT expires worthless)
My base price before brokers fees
-.62
+17.00
0
+16.38
![Page 50: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/50.jpg)
May Milk Announced at $12.0050
Jan 21 Purchased right to sell milk for $15.50, but I don’t have to (PUT). My cost for that right (premium):
May Sell my milk to the milk plant for:
May I have the right to sell milk for $15.50 and buy back for $12.00. Thanks, I’ll do it (exercise my PUT)
My base price before brokers fees
-.62
+12.00
+3.50
+14.88
![Page 51: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/51.jpg)
Farm & Risk Management Team
© 2008
51
Advanced Strategies
• Want to increase your protection? Take advantage of market gains? Premiums to costly?
– Roll up to futures– Roll up to a higher PUT– Forward contract and buy a CALL option– Buy a PUT and sell a CALL – Roll down futures to a PUT
![Page 52: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/52.jpg)
Farm & Risk Management Team
© 2008
52
Focus on Basics first, but a Taste of Advanced Strategies
• Forward Contract and Buy a Call Option
– Why?
You don’t want to risk getting a lower price in case markets fall, but you don’t want to miss out if there is a super rally!
![Page 53: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/53.jpg)
Farm & Risk Management Team
© 2008
53
Forward Contract and Buy a Call Option
– Forward contract March 2010 milk for $14.45 ($14.70 futures price less $.25 discount).
– At the same time buy a $16.00 CALL option for $.32
Remember, CALL option gives you the right to buy a futures contract for $16.00 and sell it back at the then prevailing price
![Page 54: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/54.jpg)
Farm & Risk Management Team
© 2008
54
Forward Contract and Buy a Call Option
– What are you doing to yourself?What are you doing to yourself?
– You will receive a minimum of $14.13 class III price for your milk (14.70 - .25 - .32).
– However, if markets rally beyond $16.00, then you will receive payment back from your CALL Option, which gives you the right to buy at $16.00 and sell at the higher price.
![Page 55: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/55.jpg)
Farm & Risk Management Team
© 2008
55
Forward Contract and Buy a Call Option• March 2010 turns out to be $13.50
– Sell milk to plant for $14.13 (14.70 - .25 - .32)– Your CALL option expires worthless (don’t
want to buy milk at $16.00 and then sell it at $13.50).
– C-III Base Price: $14.13– If you had forward contracted only: $14.45– If you had done nothing: $13.50
![Page 56: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/56.jpg)
Farm & Risk Management Team
© 2008
56
Forward Contract and Buy a Call Option• March 2010 turns out to be $17.50
– Sell milk to plant for $14.13 (14.70 - .25 - .32)– Exercise your CALL option (that is, buy milk at
$16.00 and sell at $17.50 for a $1.50 gain)
– C-III Base (14.13) + Call Gain (1.50): $15.63– If you had forward contracted only: $14.45– If you had done nothing: $17.50
![Page 57: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/57.jpg)
57
MarketingMarketingPlanPlan
![Page 58: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/58.jpg)
MARKETING PLAN – WHY?
1. Instills discipline into a normally emotionally driven decision
2. Provides a means to evaluate, benchmark, and learn the science and art of marketing
58
![Page 59: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/59.jpg)
Farm & Risk Management Team
© 2008
YOU WILL BE WRONG
You Can’t Outguess The Market!!
Good producers hate to be wrong!
Good marketers have to get use to being wrong!
59
![Page 60: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/60.jpg)
Farm & Risk Management Team
© 2008
Parts of a Marketing Plan
Getting ready1. Take an Inventory: marketing resources, risk tolerance, and
non-price marketing objectives 2. Know the Playing Field: situation, outlook, & historical prices.3. Know Your Toolbox: Marketing Tools and Strategies
Take Aim1. Costs of production and Financial objectives2. Personal Price Targets3. Basis and Triggers for Action4. Marketing Protocols (what do you do when your trigger’s
tripped!) Fire
1. Evaluation, control, and record-keeping
60
![Page 61: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/61.jpg)
Farm & Risk Management Team
© 2008
Marketing Resources, Risk Tolerance, Non-Price Objectives• Marketing Resources
– Skill level, computer power and savvy, marketing services, relationship with broker, banker, market advisors, skills of other partners/spouse
• Risk Tolerance– What are your personal attitudes towards risk– What is your operation’s capacity to absorb risk
61
![Page 62: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/62.jpg)
Farm & Risk Management Team
© 2008
Marketing Resources, Risk Tolerance, Non-Price Objectives• Non-Price Objectives
– Develop relationships (banker, broker, advisors)
– Start/join a marketing club– Subscribe to an advisory service– Weekly/monthly farm marketing meetings
62
What’s your non-price objective?
What will you do after breakfast tomorrow to make it happen?
![Page 63: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/63.jpg)
Farm & Risk Management Team
© 2008
Know the Playing Field
Situation, Outlook, and Situation, Outlook, and
Historical PricesHistorical Prices
63
![Page 64: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/64.jpg)
Farm & Risk Management Team
© 2008
Situation and Outlook
• U.S. Production– Cow numbers– Production per cow
• Demand• Value of the dollar (export demand)• Corn, soybean, and forage supplies and
quality• “……..”
64
![Page 65: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/65.jpg)
Farm & Risk Management Team
© 2008
Historical PricesWhat is a Good Price Based on What
the Market Provides• History
– What is the average price for each month– What is the top third price, top 16% price– What is the seasonality of prices– What is the average, top 1/3, etc. based on
forward pricing opportunities
65
© 2005
Word of CautionWord of CautionHistory may have changed?History may have changed?
![Page 66: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/66.jpg)
Farm & Risk Management Team
© 2008
66
Class III Prices
2004-2009Average: 14.69Median: 14.24Top 25%: 17.04Avg + SD: 17.80
1980-2004Average: 11.94Median: 11.89Top 25%: 12.54Avg + SD: 13.35
9
11
13
15
17
19
21
Jan
1980
Mar
198
2M
ay 1
984
Jul 1
986
Sep
1988
Nov
199
0Ja
n 19
93M
ar 1
995
May
199
7Ju
l 199
9Se
p 20
01N
ov 2
003
Jan-
06M
ar-0
8
1980-2009
![Page 67: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/67.jpg)
Farm & Risk Management Team
© 2008
67
Seasonality (Averages)
11
12
13
14
15
16
Jan
FebM
ar AprM
ay Jun
Jul
AugSep O
ctNov Dec
C-I
II/B
FP
Pri
ce
1980-87 (8)1988-95 (8)1996-03 (8)2004-09 (6)
![Page 68: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/68.jpg)
Farm & Risk Management Team
© 2008
68
Know Your Marketing Toolbox
Cash MarketForward Contract
Minimum Price Contract
Futures MarketFutures Contract
PUT OptionCALL Option
And all kinds of combinations of the above!LGM-Dairy
![Page 69: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/69.jpg)
Farm & Risk Management Team
© 2008
Costs of Production, Financial Objectives, and Personal Price Targets
What price do you uniquely need/want:
– Cost of production
– Other farm business and family financial objectives that you want the milk check to cover
69
© 2005
![Page 70: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/70.jpg)
Farm & Risk Management Team
© 2008
Financial Objectives - Example
• 120 cows @22,000 lbs = 26,400 cwt per yr.• Costs of Production = $14.75• Financial Objectives beyond cost recovery:
$40,000 (family living contribution from cows)
$40,000 (retained earnings for business - future expansion plans, improvements, etc.)
$30,000 (misc)
$110,000 (approx. 9-12 % ROROA)$110,000 (approx. 9-12 % ROROA)
70
![Page 71: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/71.jpg)
Red Ribbon:
Blue Ribbon:
Purple Ribbon:
71
Personal Price Targets
White Ribbon: (cash costs)
![Page 72: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/72.jpg)
Farm & Risk Management Team
© 2008
Item Total Cost
Cost per cwt
Cumulative
Basic cash costs 12.73 12.73
Costs of Production 14.75 14.75
Family Living 40,000 1.52 16.27
Retained Earnings 40,000 1.52 17.79
Misc 30,000 1.14 18.93
72
-Based on 26,400 cwt produced per year
![Page 73: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/73.jpg)
Farm & Risk Management Team
© 2008
Basis
• Difference between announced price and mailbox price
73
© 2005
![Page 74: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/74.jpg)
Farm & Risk Management Team
© 2008
Marketing Price Triggers for Action
Your Personal Mailbox Price
Target
Expected Basis
Marketing Price
Triggers
18.93 1.25 17.68
17.79 1.25 16.54
16.27 1.25 15.02
12.73 1.25 11.48
74
Error on your basis estimate to the low side. Being wrong leaves more money in your pocket.
![Page 75: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/75.jpg)
Farm & Risk Management Team
© 2008
Price Triggers For Action75
- Gun is loaded- Duck is in my sights- It’s duck season- It’s a big duck
A Pricing opportunity:- Exceeds my purple ribbon price target- Is top 15% historically
PULL THE TRIGGER! PULL THE TRIGGER!
© 2005
![Page 76: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/76.jpg)
Farm & Risk Management Team
© 2008
Marketing ProtocolsMarketing ProtocolsYour Marketing RulesYour Marketing Rules
76
Tough, Tough, ToughTough, Tough, Tough
![Page 77: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/77.jpg)
3-6
Less than 3
More than 6
Months Away From Market
Month
How Does The Price Compare to Historical
Prices
What is the General
Outlook for Prices
Marketing Action What is My Marketing
Decision
Middle 1/3
Low 1/3
Top 1/3
Trigger Price At What Price Will I Engage This Action
Hedge 80%
Set floor with unlimited upside
77
© 2005
![Page 78: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/78.jpg)
78
What is Your Marketing Philosophy?
![Page 79: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/79.jpg)
Do Nothing Do Something
Hedge, Put Outlook is up
???
Marketing Tools and Strategies What are they? When is it best to use them?
MarketMarket
Do
Not
hing
Forward
SaleShort
Fence
CallPut
Hedge
79
![Page 80: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/80.jpg)
ControlEvaluate Records
80
• Set aside specific time for marketing just as you set time aside for doing the milking
• Always Review and Revise (with spouse, partner, banker, Extension agent, broker, marketing club etc.)
• Market for the long run
![Page 81: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/81.jpg)
Following are Following are some people we some people we know who made know who made
their plans their plans happen!!!happen!!!
81
© 2005
![Page 82: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/82.jpg)
This child, at four years old, could not speak. Some thought he would not make it in life due to
lack of intelligence.
Who was it?
Albert Einstein
82
© 2005
![Page 83: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/83.jpg)
His music teacher once said of him, “As a composer he is hopeless.”
Who was it?
Beethoven
83
© 2005
![Page 84: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/84.jpg)
This person’s teacher told him he was too stupid to learn anything.
Who was it?
Thomas Edison
84
© 2005
![Page 85: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/85.jpg)
He was cut from his high school basketball team.
Who was it?
Michael Jordan
85
© 2005
![Page 86: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/86.jpg)
This person was fired from his first job because he lacked imagination.
Who was it?
Walt Disney
86
© 2005
![Page 87: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/87.jpg)
This person failed the 6th grade.
Who was it?
Winston Churchill
87
© 2005
![Page 88: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/88.jpg)
Farm & Risk Management Team
© 2008
Be Realistic
• Are you reducing price risk or are you wanting a higher price?
88
![Page 89: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/89.jpg)
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
J-00 J-01 J-02 J-03 J-04 J-05 J-06
Months
Cash With Mrkt
(40,000)
(30,000)
(20,000)
(10,000)
0
10,000
20,000
J-00
J-01
J-02
J-03
J-04
J-05
J-06
Months
Marketing Gain/Loss
TR Low to High Range per Month With and
W/O Marketing
$15,000
$25,000
$35,000
$45,000
$55,000
$65,000
$75,000
($200,000)
($150,000)
($100,000)
($50,000)
$0
$50,000
$100,000
$150,000
J-00
J-01
J-02
J-03
J-04
J-05
J-06
Months
Cumulative Marketing Gain/Loss
FC 100% at $10.00 Trigger
![Page 90: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/90.jpg)
$11.00 PUT for $.15
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
J-00 J-01 J-02 J-03 J-04 J-05 J-06
Months
Cash With Mrkt Desired Revenue
(2,000)
0
2,000
4,000
6,000
8,000
10,000
J-00 J-01 J-02 J-03 J-04 J-05 J-06
Months
Marketing Gain/Loss
$0$5,000
$10,000$15,000
$20,000$25,000
$30,000$35,000
$40,000$45,000
J-00 J-01 J-02 J-03 J-04 J-05 J-06
Months
Cumulative Marketing Gain/Loss
TR Low to High Range per Month With and W/O Marketing
$15,000
$25,000
$35,000
$45,000
$55,000
$65,000
$75,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
![Page 91: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/91.jpg)
FC 10%, 15% and 25% at 50th, 70th and 90th %-tile
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
J-00 J-01 J-02 J-03 J-04 J-05 J-06
Months
Cash With Mrkt Desired Revenue
(12,000)
(10,000)
(8,000)
(6,000)
(4,000)
(2,000)
0
2,000
4,000
6,000
J-00 J-01 J-02 J-03 J-04 J-05 J-06
Months
Marketing Gain/Loss
($30,000)
($20,000)
($10,000)
$0
$10,000
$20,000
$30,000
J-00 J-01 J-02 J-03 J-04 J-05 J-06
Months
Cumulative Marketing Gain/Loss
TR Low to High Range per Month With and W/O Marketing
$15,000
$25,000
$35,000
$45,000
$55,000
$65,000
$75,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
![Page 92: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/92.jpg)
Think of Marketing in Two Levels
Reduce Price Risk- Easy to do, Passive
- Effective- Likely will not result in
higher price
Increase Price- More complex, Active
- More involved- More Time
- New set of skills required- May result in higher price
![Page 93: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/93.jpg)
93
Which Type of Marketer Are You?
Both Forward
Contracted for $18.00
Announced Price Was
$20.07
Cool!I’m getting a great return
on my investment
#@%$^& I lost
$2.07!!!
![Page 94: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/94.jpg)
Farm & Risk Management Team
© 2008
94
![Page 95: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/95.jpg)
Let’s Practice Our Marketing Savvy!!
A Game Based on Managing and Marketing the Margin
![Page 96: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/96.jpg)
Farm & Risk Management Team
© 2008
Case Farm
• 100 lactating cows• Parlor/Free Stall facilities• Ration based on 23,000 lb herd average• $1.30 of income beyond class III milk sales• Budget based on current forecasts for 2010• Estimates based on the “Wisconsin Dairy Enterprise
Planning Budget 2008” (Bruce Jones and Ken Barnett with modifications by Ken Bolton), Center for Dairy Profitability
96
![Page 97: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/97.jpg)
Case FarmPrice
Targets Description$/cwt
Feed Costs
$7.50
Red Ribbon
Total income and price needed to cover feed costs and minimum family living, livestock, replacement, and labor costs.
$14.63
Blue Ribbon
Total needed to cover feed, Red Ribbon, and facility and equip (Cost of Production).
$16.11
Purple Ribbon
10% ROROA Total needed above feed costs.
$17.17
97
![Page 98: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/98.jpg)
Farm & Risk Management Team
© 2008
First of Three First of Three Marketing DatesMarketing DatesYou can price protect feed costs and milk now, the 2nd date or the 3rd date
OR you can let it ride
98
![Page 99: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/99.jpg)
Current Feed Cost Estimates
Dice % Hay CornSBM & Protein
Min. Mix
Feed Costs per CWT
A 2 3 114 3.00 200 350 5.70
B 3,4,5 25 126 3.50 275 450 6.63
C 6,7,8 44 132 4.25 340 550 7.49
D 9,10,11 25 152 5.00 380 650 8.63
E 12 3 165 5.50 420 750 9.45
99
Decision: You can 1) lock these costs in or 2) let them Decision: You can 1) lock these costs in or 2) let them rideride
What is Your Decision?What is Your Decision?
![Page 100: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/100.jpg)
Price Targets Given Feed Costs
FeedCosts
Red Blue Purple
A 5.70 12.83 14.31 15.37
B 6.63 13.76 15.24 16.30
C 7.49 14.62 16.10 17.16
D 8.63 15.76 17.24 18.30
E 9.45 16.58 18.06 19.12
100
Red Ribbon: minimum family living + livestock + replacement, + laborBlue Ribbon: Red + facility and equipment costsPurple: Red + Blue + 10% ROROA
![Page 101: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/101.jpg)
1st of 3 Pricing Opportunities
1011121314151617181920
1/21/2009 3/21/2009 5/21/2009 7/21/2009
Futures CloseAverage (14.40)Top 1/3rd (15.50)
7 months
out
Futures: 14.00
Put Prices$13.75 @ .64: 13.11$13.25 @ .50: 12.75
Outlook:
![Page 102: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/102.jpg)
1st of 3: Make a Decision and Record It102
Futures: 14.00
Put Prices$13.75 @ .64: 13.11$13.25 @ .50: 12.75
Outlook:
10
11
12
13
14
15
16
17
18
19
20
1/21/20093/21/20095/21/20097/21/2009
FeedCosts
Red Blue Purple
A 5.70 12.83 14.31 15.37
B 6.63 13.76 15.24 16.30
C 7.49 14.62 16.10 17.16
D 8.63 15.76 17.24 18.30
E 9.45 16.58 18.06 19.12
What you can do C-III Basis Your Price
Do Nothing -- -- unknown
Lock-in with Futures 14.00 1.30 15.30
High Floor price 13.11 1.30 14.41 or higher
Low Floor Price 12.75 1.30 14.05 or higher
![Page 103: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/103.jpg)
Second of Three Second of Three Marketing DatesMarketing Dates
103
Feed costs may have changed. The dice will be thrown with the following result:
Dice Result Probability Result
2, 3, 4, or 5 28% Feed costs decrease one step
6, 7, or 8 44% Feed Costs do not change from what they were
9, 10, 11, or 12 28% Feed costs increase one step
![Page 104: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/104.jpg)
Current Feed Cost Estimates
Dice % Hay CornSBM & Protein
Min. Mix
Feed Costs per CWT
A 2 3 114 3.00 200 350 5.70
B 3,4,5 25 126 3.50 275 450 6.63
C 6,7,8 44 132 4.25 340 550 7.49
D 9,10,11 25 152 5.00 380 650 8.63
E 12 3 165 5.50 420 750 9.45
104
Decision: If you have not already locked in costs, Decision: If you have not already locked in costs, You can 1) lock these costs in or 2) let them rideYou can 1) lock these costs in or 2) let them ride
What is Your Decision?What is Your Decision?
![Page 105: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/105.jpg)
1011121314151617181920
1/21/2009 3/21/2009 5/21/2009 7/21/2009
Futures CloseAverage (14.40)Top 1/3rd (15.50)
7 months
out
5 months
out
Futures: 13.74
Put Prices$13.50 @ .60: 12.90$13.00 @ .35: 12.65
Outlook:
2nd of 3 Pricing Opportunities
![Page 106: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/106.jpg)
106
Futures: 13.74
Put Prices$13.50 @ .60: 12.90$13.00 @ .35: 12.65
Outlook:
101112131415
1617181920
1/21/2009 3/21/2009 5/21/2009 7/21/2009
FeedCosts
Red Blue Purple
A 5.70 12.83 14.31 15.37
B 6.63 13.76 15.24 16.30
C 7.49 14.62 16.10 17.16
D 8.63 15.76 17.24 18.30
E 9.45 16.58 18.06 19.12
What you can do C-III Basis Your Price
Do Nothing -- -- unknown
Lock-in with Futures 13.74 1.30 15.04
High Floor price 12.90 1.30 14.20 or higher
Low Floor Price 12.65 1.30 13.95 or higher
2nd Date: Make a Decision and Record It
![Page 107: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/107.jpg)
Third and Last Third and Last Marketing DateMarketing Date
107
Dice Result Probability Result
2, 3, 4, or 5 28% Feed costs decrease one step
6, 7, or 8 44% Feed Costs do not change from what they were
9, 10, 11, or 12 28% Feed costs increase one step
Feed costs may have changed. The dice will be thrown with the following result:
![Page 108: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/108.jpg)
Current Feed Cost Estimates
Dice % Hay CornSBM & Protein
Min. Mix
Feed Costs per CWT
A 2 3 114 3.00 200 350 5.70
B 3,4,5 25 126 3.50 275 450 6.63
C 6,7,8 44 132 4.25 340 550 7.49
D 9,10,11 25 152 5.00 380 650 8.63
E 12 3 165 5.50 420 750 9.45
108
Decision: If you have not already locked in costs, Decision: If you have not already locked in costs, You can 1) lock these costs in or 2) let them rideYou can 1) lock these costs in or 2) let them ride
What is Your Decision?What is Your Decision?
![Page 109: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/109.jpg)
1011121314151617181920
1/21/2009 3/21/2009 5/21/2009 7/21/2009
Futures CloseAverage (14.40)Top 1/3rd (15.50)
3 months
out
Futures: 17.40
Put Prices$17.25 @ .83: 16.42$16.25 @ .42: 15.83
7 months
out
5 months
out
Outlook:
3rd and Last Pricing Opportunity
![Page 110: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/110.jpg)
110
FeedCosts
Red Blue Purple
A 5.70 12.83 14.31 15.37
B 6.63 13.76 15.24 16.30
C 7.49 14.62 16.10 17.16
D 8.63 15.76 17.24 18.30
E 9.45 16.58 18.06 19.12
What you can do C-III Basis Your Price
Do Nothing -- -- unknown
Lock-in with Futures 17.40 1.30 18.70
High Floor price 17.25 1.30 18.55 or higher
Low Floor Price 16.25 1.30 17.55 or higher
3rd Date: Make a Decision and Record It
101112131415
1617181920
1/21/2009 3/21/2009 5/21/2009 7/21/2009
Futures: 17.40
Put Prices$17.25 @ .83: 16.42$16.25 @ .42: 15.83
Outlook:
![Page 111: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/111.jpg)
Final Feed Costs Dice % Hay Corn
SBM & Protein
Min. Mix
Feed Costs per CWT
A 2 3 114 3.00 200 350 5.70
B 3,4,5 25 126 3.50 275 450 6.63
C 6,7,8 44 132 4.25 340 550 7.49
D 9,10,11 25 152 5.00 380 650 8.63
E 12 3 165 5.50 420 750 9.45
111
Dice Result Probability Result
2, 3, 4, or 5 28% Feed costs decrease one step
6, 7, or 8 44% Feed Costs do not change from what they were
9, 10, 11, or 12 28% Feed costs increase one step
![Page 112: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/112.jpg)
Farm & Risk Management Team
© 2008
1011121314151617181920
1/21/2009 3/21/2009 5/21/2009 7/21/2009
Futures CloseAverage (14.40)Top 1/3rd (15.50)
Announced Class III = $10.90Your Price = 12.20
Markets Are Closed and Class III Announced at: $10.90/cwt$10.90/cwt
![Page 113: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/113.jpg)
What Was Your Price Compared to the Price Targets?
FeedCosts
Red Blue Purple
A 5.70 12.83 14.31 15.37
B 6.63 13.76 15.24 16.30
C 7.49 14.62 16.10 17.16
D 8.63 15.76 17.24 18.30
E 9.45 16.58 18.06 19.12
113
Red Ribbon: minimum family living + livestock + replacement, + laborBlue Ribbon: Red + facility and equipment costsPurple: Red + Blue + 10% ROROA
![Page 114: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/114.jpg)
114Summary of Locked-in Pricing Opportunities (Profit/Cow/Month)
COPAnnounced10.90 base
Your Price:12.20
2nd Date13.74 base
Your Price:15.04
1st Date14.00 base
Your Price:15.30
3rd Date17.40 base
Your Price:18.70
A 5.70 (4,050) 1,393 1,892 8,408 B 6.63 (5,842) (398) 100 6,617 C 7.49 (7,475) (2,032) (1,533) 4,983 D 8.63 (9,667) (4,223) (3,725) 2,792 E 9.45 (11,233) (5,790) (5,292) 1,225
![Page 115: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/115.jpg)
115Summary of Locked-in Pricing Opportunities (Profit/Cow/Annualized)
COPAnnounced10.90 base
Your Price:12.20
2nd Date13.74 base
Your Price:15.04
1st Date14.00 base
Your Price:15.30
3rd Date17.40 base
Your Price:18.70
A 5.70 (48,600) 16,720 22,700 100,900 B 6.63 (70,100) (4,780) 1,200 79,400 C 7.49 (89,700) (24,380) (18,400) 59,800 D 8.63 (116,000) (50,680) (44,700) 33,500 E 9.45 (134,800) (69,480) (63,500) 14,700
![Page 116: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/116.jpg)
Final Comment116
Advice and counsel from others is critical - Extension Agents - Lenders - Consultants - Marketing Specialist - Etc.
BUT, in the end it is your call:
![Page 117: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/117.jpg)
![Page 118: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/118.jpg)
Farm & Risk Management Team
© 2008
118
Futures Prices in Context(Comparison of Feb 7 to Sept. 14, 2007)
111213141516171819202122
C-I
II/B
FP P
rice
Average
75 %tile
On Feb 7,2007
On Sep 14,2007
1996-2006 data
![Page 119: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/119.jpg)
119
![Page 120: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/120.jpg)
Farm & Risk Management Team
© 2008
Sources: Websites
• The Oil Drum: http://www.theoildrum.com/story/2006/10/5/215316/408• Association for the Study of Peak Oil: http://aspo-usa.com/ • Oil Market Report: http://omrpublic.iea.org/ • Now and Future: http://www.nowandfutures.com/index.html • WTRG Economics: http://www.wtrg.com/ • World Bank Group: http://ddp-ext.worldbank.org/ext/DDPQQ/member.do?method=getMembers• Farm Foundation: http://www.farmfoundation.org/ • USDA Economic Research Service: http://www.ers.usda.gov/ • Trading Charts, Inc: http://futures.tradingcharts.com/ • CHOICES: http://www.choicesmagazine.org/magazine/issue.php • Foreign Agricultural Service: http://www.fas.usda.gov/default.asp • University of Illinois Farmdoc website: http://www.farmdoc.uiuc.edu// • Iowa State University Ag Decision Maker: http://www.extension.iastate.edu/agdm/ • University of Wisconsin, Center for Dairy Profitability: http://cdp.wisc.edu/ • University of Minnesota Center for Farm Financial Management: http://www.finbin.umn.edu/
![Page 121: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/121.jpg)
Farm & Risk Management Team
© 2008
Sources: Written Articles
• Global Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices. USDA/ERS, July 2008. http://www.ers.usda.gov/Publications/WRS0801/
• Bahn, Henry. “Commodity Prices Rock World Markets: Structural Shift or Short Term Adjustments?” Choices, AAEA, 2nd qrt 2008 23(2). http://www.choicesmagazine.org/magazine/issue.php
• Westhoff, Pat. “Farm Commodity Prices: Why the Boom and What Happens Now?” Choices, AAEA, 2nd qrt 2008 23(2).
• Lawrence, John D., James Mintert, John D. Anderson, and David P. Anderson. “Feed Grains and Livestock: Impacts on Meat Supplies and Prices.” Choices, AAEA, 2nd qrt 2008 23(2).
• Irwin, Scott H., Philip Garcia, Darrel L. Good and Eugene L. Kunda. “Recent Convergence Performance of CBOT Corn, Soybean, and Wheat Futures Contracts.” Choices, AAEA, 2nd qrt 2008 23(2).
• Mark, Darrell R., B. Wade Brorsen, Kim B. Anderson, and Rebecca M. Small. “Price Risk Management Alternatives for Farmers in the Absence of Forward Contracts with Grain Merchants.” Choices, AAEA, 2nd qrt 2008 23(2).
• Abbott, Philip C., Christopher Hurt, and Wallace E. Tyner. “What’s Driving Food Prices?” Issue Report from the Farm Foundation, July 2008. http://www.farmfoundation.org/news/templates/template.aspx?articleid=404&zoneid=26
• Fortenbery, T. Randall and Hwanil Park. “The Effect of Ethanol Production on the U.S. National Corn Price.” Univ. of WI-Madison Dept. of Ag and Applied Econ: Staff Paper no. 523, April 2008.
![Page 122: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/122.jpg)
Farm & Risk Management Team
© 2008
Sources: Written Articles
• Irwin, Scott. “Crop value and volatility in a new era” 2008 Illinois Farm Economics Summit, http://www.farmdoc.uiuc.edu//presentations/index.asp .
• Schnitkey, Gary. “Prospects for Crop Production Costs” 2008 Illinois Farm Economics Summit, http://www.farmdoc.uiuc.edu//presentations/index.asp .
• Schnitkey, Gary. “Farm Economics Facts & Opinions”, Department of Agricultural and Consumer Economics, College of Agricultural, Consumer, and Environmental Sciencds, university of Illinois at Urbana-Shampaign, FEFO 08-13, July 11, 2008.
• Duffy, Michael, and Darnell Smith. “Estimated Costs of Crop Production in Iowa- 2009,” Ag Decision Maker, Iowa State University, University Extension, FM-1712 Revised, December 2008.
• Duffy, Mike. “Estimating costs of crop production for 2009,” Ag Decision Maker Newsletter, Iowa State University, University Extension, January 2009
![Page 123: Marketing Basics Dipping Your Toe in the Shallow End of the Marketing Pool Kevin Bernhardt UW-Extension and Center for Dairy Profitability January 27,](https://reader035.vdocument.in/reader035/viewer/2022062801/56649e2c5503460f94b1b077/html5/thumbnails/123.jpg)
What Have I Done To Myself?
Date Description of Transaction
Cash Flow
123
Date Description of Transaction
Cash Flow