Use of the History of a Futures Contract for Decision-Making

The daily settle prices for each contract is available from a number of sites including this one (click here to access these daily settle prices).  If you would like to see examples of a graph of dairy settle prices click here which shows a graph of a recent BFP futures settle price. 

You can combine the dairy settle prices shown in the above graph with recent history of the associated cash prices to give you an indication of whether current futures settle prices could provide you the opportunity to lock in a favorable price.

For example, we combine the above graph with the average of the   MW/BFP price series observed over the 1988-1998 period for the month of the underlying contract .  In this graph we also show the top 3 and bottom 3 year's prices.  For those time periods where the settle price is above the top 3 year value than this may indicate that you may want to think about hedging your output price or at least using an option to set  a price floor.