In recent years, dairy farmers have ranted and raved about price volatility. Price fluctuations can be a blessing and a curse. Now may be the time to lock in some blessings. Below are Monday's closing CME Basic Formula Price figures:

July	$13.50
August	15.80
September	15.90
October	15.80
November	15.00
December	13.96

For example, the November BFP gives the opportunity to lock in a January blend price of about $17.70, assuming current differentials are in effect and a co-op premium of $1.00. Alternatively a November put option at a $14.50 strike price could be bought for about $.50. This would lock in a January minimum blend price of about $16.85.

It is not a question of whether milk prices will fall, it is a question of when. Corn at $2.00/bu and soybean meal at $140/T do not equate with a $12.00 BFP, much less a $15.00 level. People can talk about galloping cheese demand and the weather all they want ­ but ultimately a surge in milk supply will overwhelm these factors.

It is possible that the price rally will persist into the new year like in 1999. But don't bet on it.

THE CLEMSON UNIVERSITY COOPERATIVE EXTENSION SERVICE OFFERS ITS PROGRAMS TO PEOPLE OF ALL AGES, REGARDLESS OF RACE, COLOR, SEX, RELIGION, NATIONAL ORIGIN, OR HANDICAP AND IS AN EQUAL OPPORTUNITY EMPLOYER.
COOPERATIVE EXTENSION WORK IN AGRICULTURE AND HOME ECONOMICS--STATE OF SOUTH CAROLINA, CLEMSON UNIVERSITY, U.S. DEPARTMENT OF AGRICULTURE, AND SOUTH CAROLINA COUNTIES COOPERATING.

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updated 8/02/99