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The milk production report, usually released around the 20th of the month, is subject to a high degree of error. The 90% confidence interval usually ranges in the 0.6-0.8% range by season, with most revisions to the downside. This means the report is usually overstating both cows and total production. Given its survey method (phone calls) to estimate production, it is a biased report. However, the trade floor eats this one up, despite its vulnerabilities. This probably creates more volatility in the market than all of the reports combined, which is why it is important. Gauging reality, however, is done through the more reliable products production and inventory reports, as that relies on more accurate physical counts. |
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