Degree Name
Master of Science
Graduate Program
Agribusiness Economics
Advisor
Sanders, Dwight
Abstract
This study examines whether Class III and Class IV milk futures contracts can effectively hedge farm-level milk prices and reduce exposure to price volatility. The price volatility for dairy farmers is a major issue and makes it difficult for them to stay afloat. With the constant changes in input costs combined with the instability of the prices the farmers receive, the dairy industry is very difficult. Using regression analysis, the relationship between farm-level prices and futures prices was evaluated throughout multiple models, including those accounting for seasonality. The results from the regression analysis indicate that both Class III and Class IV futures have statistically significant effects on farm-level prices and can be used to manage price risk at the farm level.