Milk price: Sodiaal producers will be able to secure their B price
Thanks to the futures market, the Sodiaal cooperative offers its members a service to protect themselves against the volatility of butter and milk powder prices.
Published on April 17, 2021 - By Costie Pruilh © E. BignonIt is still a pilot program, where 100 milk producers have already signed up. “By the summer, 100 other producers will be able to benefit from this B price management tool,” says Sodiaal. It may be extended if this life-size test is approved by members. “The objective is to protect against the volatility of price B, due to the volatility of butter and powder prices. On a platform, breeders will be able to secure their margin by locking in a sale price on all or part of their volume B”, explains Olivier Gaffet, Sodiaal administrator. Price B changed between €241.6/1000 l in June 2020 and €338.7 in March 2020, over the year 2020.
Learn to read the markets
Concretely, a breeder who commits to the program must follow a one-day training course in reading market indicators and using the platform. He pays an entry fee of 150 euros which is used to pay for this service (cost of the platform, of the broker, etc.). A bi-monthly market newsletter is sent to participating members so that they can anticipate their next positions on price B.
Each month, the participant can take a position on a given day (a Tuesday). The day before, Monday, the future butter-powder prices, over twelve to fifteen months, are given by the EEX futures market. These future prices are calculated from positions taken on the futures market for butter and powder. “To position themselves, the breeder must know their cost of production and know how to read market trends; hence the required training and the fortnightly newsletter”, emphasizes Olivier Gaffet.
Position yourself over twelve to fifteen months
The breeder can commit all or part of his volume B (10 to 30% of the individual reference). Once the breeder has committed volumes, there is no going back. "There is, in almost all cases, no interest in committing volume A in addition to its volume B. The platform does not prohibit this scenario, but alerts the breeder." Once the breeder has committed volumes, there is no going back. Sodiaal members have at least 10% of their reference in volume B and some producers who had requested additional volumes, have up to 30% of their reference at most in B.
100 participants at the start of the year
Once the commitments have been closed, on Wednesday, an independent broker will look for “clients” to position themselves to buy the committed volumes at the price indicated. “Then, we come back to the members to tell them the volume on which there are buying positions. So far (mid-April), the broker has found about 90% of the volumes requested by participating breeders. »
Over the first three months of the year, 5 million liters have already been committed on the futures market, for maturities up to May 2022. The future prices published last April were for example: €345/1,000 l for December 2021, €339 for January 2022, €337 for March 2022.
Economy & societySodiaalMilk prices
