News Milk
Milk Trading Company members continue to make additional contributions
Participants in the Milk Trading Company have now had a number of months of loss due to the strong and rapid rise in milk prices. Months in which they had to make additional payments, according to the MTC. That situation could continue for a while.
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It is impossible to say how long the current situation will continue. MTC seems to be getting impatient with the current situation. Director and financial advisor Niek Groot Wassink believes 'that this trend cannot continue indefinitely'. "Even though proportionately less milk is supplied than expected, there are little to no stocks hanging above the market, and there is good to very good demand from the dairy market. At some point the ship will turn around. The only question is : when?"
According to Groot-Wassink, futures trading takes into account that the price at this time next year will be somewhat lower than now. That is why it is still worthwhile to cover part of the volume for a fixed price, he believes.
The risk of further additional deposits may decrease
Also, a participant who currently has a contract with a lower price than the market price does not have to become completely despondent. "If the futures market milk price for, for example, 2022 is currently higher than currently hedged, a participant must make additional payments. But the extent to which he has actually lost that money will only become apparent when the individual months are reached, as payment is made on a monthly basis. "If the milk price has fallen below the hedged price again, he will get back the excess extra money paid."
According to MTC, when the milk price drops again and the right time has come to hedge the risks of a falling price again, there is still a lot to look at. For four years, MTC has made 'mere profits', the company emphasizes. Now the wind is blowing the other way.