Article for IDP newsletter
By Mike Rusch, Stewart-Peterson Inc.
If you’ve ever been up in the middle of the night, you’ve seen one of the infomercial world’s biggest stars on late-night TV, Ron Popeil with his Ronco Rotisserie oven. Perhaps his famous line is ringing in your ears: “Set it and forget it!” While this feature may be attractive for selling his brand of convenience cooking, it should not be the way you approach price risk management.
You may be among the producers who locked in what you believed to be a good margin back in November and December of 2013. Perhaps you sold 50-75 percent of your milk production for all of 2014 through your milk plant or in your hedge account, with the mentality of “lock in a good margin and move on.”
Now as the milk rally has picked up steam, each month brings new regret and frustration about the prices you are missing. That’s understandable. That’s why our team encourages an active management approach rather than locking in margins for the sake of getting it done.
What is an active management approach? It is striving to achieve the best possible price levels for feed and for milk, independent of one another. For example, a producer who is actively managing market risk for milk will go ahead and make sales incrementally that will lock in favorable prices. Then, if there is opportunity for the market to rally, those sales can be covered with call options, providing the opportunity to participate in a rally. You continuously, and actively, monitor price levels and put strategies in place for future price moves.
 Some exciting plans are underway for the IDP Summer Tour to Ohio! First stop in Ohio will be Select Sires' headquarters in Plain City. We have a bull parade planned, and then we will have the opportunity to learn from Gary Conklin. You may remember a video that was secretly filmed at his dairy farm in 2010 that received national attention. He learned some difficult and valuable lessons and will share some of them with us. We also plan to visit Miley Holsteins in West Salem, Ohio and Pine Tree Dairy in Rittman. We also will stop at Eastern Laboratory Services. The cost of attending for IDP member farms is $125 for the first farm member and $75 for any subsequent members. All students can attend for $75. This price includes transportation, lunch and dinner on June 4th. You will need to make your own lodging reservations. A block of rooms has been reserved at Comfort Inn and Suites in Wadsworth, Ohio (just west of Akron) for $99.99. This rate is guaranteed through May 15th. To make reservations, call 330-336-7692 and ask for the Indiana Dairy rate. Download a brochure with more information here. Even though it's not mentioned in the brochure, sometimes the bus conversation is the best take-away of all! Why not join us on June 4-5!
Bus Pick-up points on Wednesday, June 4:
7 AM Eastern Time Best Western, Lafayette (I65/SR 26)
9:15 AM Eastern Time Meijer Store Parking Lot, 2505 Chester Blvd., Richmond, IN (I70 and US 27)
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