Dollars and Sense: Riding the Market
 |
Katrina Curti Rainey
Tulare, Calif.
The Raineys milk 550 Jerseys at Rainimade Dairy. Katrina helps her dad with his 2,800-cows at nearby Curtimade Dairy.
Although we consider ourselves fairly risk-adverse people, Brian and I conduct very limited risk management tactics on the dairy.
As opposed to our beef cattle, where forward contracts of live cattle are a must, we have yet to ever contract milk. We pay in the minimum $100 fee to the Dairy Margin Protection Program and have not been able to calculate the value of participating at any higher level.
We feed and manage for higher milk components because the basis spread we tend to see between our cash price and the class price results in an additional margin. Our feed efficiency is also a plus.
Brian tracks feed markets and has locked in very good prices for our corn, gluten feed and wet distillers. For holiday rail car purposes, we will contract other current feeds in our inventory. However, most remaining commodities we feed would typically be purchased on the spot market. That’s because we believe there is low risk on the up- or downside of these commodities in today’s market. We also manage for a large forage carryover year over year.
