Milk Prices > Predicted Mailbox Prices (Wisconsin)

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Predicted Data

Month Class III Class IV Mailbox
Feb 2016 13.80 13.49 15.59
Mar 2016 13.74 12.74 15.42
Apr 2016 13.63 12.68 14.77
May 2016 12.82 13.24 14.17
Jun 2016 12.49 13.75 13.96
Jul 2016 12.95 14.28 14.32
Aug 2016 13.67 14.83 15.02
Sep 2016 14.47 15.03 15.74
Oct 2016 14.74 15.30 16.88
Nov 2016 14.87 15.35 17.00
Dec 2016 14.94 15.20 17.04
Jan 2017 14.99 14.64 16.79
Feb 2017 15.11 14.57 16.88
Mar 2017 15.32 14.59 17.06
Apr 2017 15.38 14.94 16.63

The Mailbox Price was regressed on the Class III and Class IV price from 2001-01-01 to 2016-01-01. Then, the Mailbox price is predicted using the formula:

Mailbox Price = 1.837 + 0.856 (Class III Price) + 0.158 (Class IV Price) -0.201 (Q1) -0.744 (Q2) -0.868 (Q3)

where Q1, Q2 and Q3 are 0 or 1 according as whether the price pertains to quarters 1, 2 or 3. For the Class III and Class IV prices, we use the Announced Class III Price and Announced Class IV Price until Apr 2016, and the Class III Futures Settle Price and Class IV Futures Settle Price henceforth.

Regression Statistics

R2 = 0.9871, Adjusted R2 = 0.9868.
  Intercept Class III Class IV Q1 Q2 Q3
Coefficient 1.837 0.856 0.158 -0.201 -0.744 -0.868
Standard Error 0.152 0.020 0.019 0.090 0.090 0.089