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A Cornell economist explains that high Class III milk futures, exceeding $20/cwt for the coming months, do not translate directly into high mailbox prices for U.S. dairy farmers. The mailbox price combines Class III, the producer price differential, cooperative and market adjustments, and farm-specific factors.
For June 2020, a negative PPD and hauling-related adjustments left producer paychecks well below the announced $21.04 Class III price.
Dairy buyers and producers should evaluate milk revenue using the full mailbox price, not Class III futures alone, since negative PPDs can erode returns when spot prices swing. This affects hedging decisions and the actual cost of milk-based feed inputs.
proag.comAug 28, 2020Not enough comparable past events yet for a historical read.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
