COVID-19 is impacting the entire economy and marketplace, including the milk market. We’ll be providing weekly updates with milk futures prices and other market updates to help keep you as knowledgeable as possible during this time. View the entire list of weekly updates.
For the first time in about a month, Class III milk futures average price for the next 12 months declined relative to the previous week. Average Class III price as of 2 p.m. on Friday, June 12, 2020 was $16.84 per cwt, a decline of $0.16 from last week’s $17.00. Class IV notched a slight $0.07 per cwt increase over last Friday. Today’s average price for the next 12 months is $15.80, up from $15.73 last week.
There is still a lot of volatility in the market caused by COVID-19. We have seen some decent increases over the last month, but there seems to be more downward potential on milk price right now than upward. Dairy Revenue Protection (DRP) insurance is available for purchase. Next Monday, June 15, 2020, is the last date to purchase third quarter 2020 policies. After June 15, DRP sales will be available for purchase for fourth quarter 2020 through fourth quarter 2021. DRP milk price floors probably are not the most attractive right now, but they are much better than they looked a month ago. Right now, a 95% price protected 50% Class III/50% Class IV DRP policy can be purchased to protect a milk price floor of $15.35. If a dairy typically has a basis of $1.50 per cwt over blend, this equates to a milk price of $16.85 for fourth quarter 2020. It is worth considering DRP policies right now to protect against possible future declines in this continued volatile market.
