Some recent publications have suggested that dairy farmers who have forward contracted milk or sold futures will be financially hurt by negative PPDs compared to those who did not. The explanations that we have seen and heard for this alleged difference are obscure, confusing, misleading, illogical, and flat-out wrong. They often seem to be an attempt to discourage risk management rather than to explain how negative PPDs affect farmers’ milk checks. The fact is, negative PPDs affect dairy farmers exactly the same, whether or not they have locked in a base Class III price. That’s because negative PPDs affect basis, not the base Class III price. And hedging or forward contracting has absolutely no effect on basis.