Models of FMMO Pricing
  • Federal Milk Marketing Order 2000-Present Final Decision Excel File Used to Calculate Class I Price Mover, Class II, Class III and Class IV Prices, Advance Pricing Factors and Component Prices.  The only information required to estimate either Advanced or Announced prices are the 2-week or monthly product price averages, respectively.

  • A more detailed model than the above, the Class Price Forecaster:   is an excel file which you can use to forecast Class I Price Mover, Class II, Class III and Class IV Prices, Advance Pricing Factors and Producer Component Prices incorporating the Final Decision.  You can input NASS survey data to use this file.  When opening this file you will be asked to enable macros.  To enable the Class I differential calculation you must answer yes to this question.  You can use this file to replicate the calculations done by the USDA in determining the Advanced or Announced prices.  You will be required to input weekly transactions data necessary for the calculation of the monthly product price averages.

  • Summary of FMMO Classified Prices rules for:
Models of California Milk Pricing Models of the Milk Income Loss Contract (MILC) Program
  • A spreadsheet model showing how to calculate your MILC and MILCX payments, Dec. 2001 - Present

  • A spreadsheet model for Undertaking a Farm-Level Analysis of Participation in the MILC-X Program.   This set of spreadsheets allows calculations of payments that either have been received through the MILC program since December 2001 or will be received in future months under the MILCX program, based upon the best estimates possible for future milk prices (i.e., either published Class I mover prices or the most recent settle prices for Class III and IV futures contracts).
Models Useful in Designing Futures and Options for Milk Price Risk Managment
  • Basic and Advanced Risk-Management Strategy Spreadsheets:  Version 1    This workbook contains a series of eight worksheets to provide you extra background for the development of futures and options strategies.

  • Basic and Advanced Risk-Management Strategy Spreadsheets:  Version 2    This set of spreadsheet models extends the explanations given in the spreadsheets provided above and demonstrates calculations of productions, costs of production, and determination of basis.   In addition, models are provided for determining how best to organize different strategies of risk management, including the simpler strategies of hedging in the futures market, buying of put or selling of call options, and combining a cash contract with a buy or call option.   More advanced strategies, such as a "short fence", a futures "roll-up", or risk reversals are also illustrated.

  • Mailbox/ClassIII Basis Calculations   After users have entered actual or hypothetical mailbox prices for various months, this worksheet subtracts corresponding ClassIII/BFP prices and generates basis prices.   Basis prices may be calculated for any month in a 6-year period prior to the present.

A Simple Model for Forecasting Class III and IV Milk Prices
  • Class III and Class IV Milk Price Projector In this spreadsheet, the user may generate Class III and Class IV price forecasts for up to one year, based upon trend projections for cow numbers and milk production per cow and upon historical economic relationships between (1) total U.S. milk production and production of Class III and Class IV products and (2) product prices and inventory levels.   The model allows users to generate multiple price forecasts by simple changes to values for milk production or inventories.
Tutorials for the use of Futures and Options for Milk Price Riskmangement
    Note:  These tutorials are relatively old so refercences to certain institutions or contracts may not be valid.  However the principles outlined can be applied to today's trading environment.  We are in the process of updating these tutorials.

  • Dairy Futures & Options Tutorial This software is the University of Wisconsin's "Dairy Futures and Options Tutorial", which has been updated to incorporate changes that have occurred since Federal Order Reform took effect in January 2000. The tutorial presents a detailed discussion of classified pricing under this new system. Complete instructions for downloading, installing, and running the tutorial are presented in addition to the direct link for downloads.

  • Dairy Futures & Options Tutorial (Shorter On-Line Version of the above) This software is the University of Wisconsin's Dairy Futures/Options Tutorial.
Miscellaneous Spreadsheet Models and Other Software
  • Probability of Obtaining a Minimum Class III Value This spreadsheet file can be used to obtain an estimate of the probability of obtaining a particular Class III value or greater.

  • Probability of Obtaining a Minimum Class III Value (Season-Specific) This spreadsheet file can be used to obtain an estimate of the probability of obtaining a particular Class III value or greater.  Under this model we use season specific means and standard deviations (Winter=Dec, Jan & Feb; Spring=March, April & May; Summer=June, July, & Aug; Fall=Sep., Oct., & Nov.)

  • Spreadsheet Model Used to Determine Value of Milk Used in Cheese Manufacturing There are a number of ways of determining milk value.   This program uses the Van Slyke Cheese yield formula to allocate the value of cheese, whey and other products from cheese manufacturing to fat and protein components of milk.

  • On-Farm Milk Processing Economics and Cash Flow After you have entered projected sales, investment costs, and production coefficients, this series of spreadsheet models allows you to analyze your "On-Farm Milk Processing" plan.  This decision aid produces both profitability and cash-flow analyses.  Sensitivity analysis is presented in a tabular format.

  • Economic Analysis of Cheese Yield (EACY) This stand-alone Windows program analyzes your cheese yield based on the modified Van Slyke cheese yield formula.  This software can be used to analyze the economic implications of changes in milk quality, cheese characteristics, milk standardization procedures, whey by-products produced, etc.  This software is available for purchase.  To view a PDF file describing this software, click here.