Your position per product, quality and delivery period: how dairy ingredient traders track what they have bought, sold and hold in stock, and what to check every day.
Your position is the balance between what you have bought and what you have sold, including the stock you hold. In dairy ingredient trading, tracking it properly means looking further than one total figure. You need to see your position per product, per quality and per delivery period, and you need to know which part has a fixed price and which part does not. This article explains what that looks like in practice, where spreadsheets fall short and what to check every day.
Position tracking means keeping a current overview of your purchased quantities versus your sold quantities across all open contracts, plus the stock you hold. If you have bought more than you have sold, you are long and exposed to falling prices. If you have sold more than you have bought, you are short and exposed to rising prices.
A position combines four sources of information:
For a general introduction to the position list itself, see What is a position list and why do traders check it every morning?
In dairy, the net total across all contracts hides most of the risk. Three dimensions make the difference.
Product and quality. Skimmed milk powder medium heat and low heat, food grade and feed grade, WPC 35 and WPC 80: they trade at different prices and are not interchangeable for your customer. If your position nets them together, a long position in one can mask a short position in the other. Decide up front which products and qualities you treat as one position and which you keep separate.
Delivery period. A contract for 300 tonnes delivered over three months is not the same as 300 tonnes available today. An example:
You buy 300 t of SMP medium heat, 100 t per month for January to March. You sell 100 t per month in February and March to customer A, and another 150 t in March to customer B.
The total suggests a small short position. The monthly view shows stock you need to carry for two months and a March shortfall you need to cover. Those call for different decisions.
Units. Liquid products such as cream and concentrates are often bought and sold on dry matter, fat or protein content rather than on wet weight. If one contract is in kilograms of product and the other in kilograms of dry matter, your position is only correct once both are on the same basis. See Hoe werkt de berekening van de droge stof in de zuivelhandel?
Not every tonne in your position carries the same price risk. A fixed-price contract locks in the price. A contract priced against a market quotation or futures settlement moves with the market until the price is fixed. So track both: how many tonnes you are long or short, and how many of those tonnes have a fixed price.
Two other elements change your price exposure without changing your physical position:
To see what your open positions are worth at today’s prices, you value them at market prices: What is mark-to-market and why does every dairy trader need it?
Many small and mid-sized dairy traders manage their positions in Excel. That works while volumes are low, but the problems build up as the business grows:
As a result, imbalances tend to surface at the month-end reconciliation, when they are more expensive to correct. For a side-by-side comparison, see Excel versus Moo.
In trading software, the position is not a separate file but a view on data you already enter. When you create a contract, register a call-off, book a delivery or adjust stock, the position updates. There is no separate recalculation step.
In Moo Software, the position list brings purchase and sales contracts, stock and planning together in one overview, showing where you stand today and in the weeks and months ahead. You configure it to your own way of working, for example whether planned orders are included and how prices are calculated, such as weighted averages. Because contracts, logistics and invoicing are in the same system, the quantities in your position match the quantities you deliver and invoice. Invoices can then go to your accounting package, for example through the Exact Online export.
Software does require setup. Products, qualities, units and contract terms need to be set up correctly once. That is also where the dairy-specific choices from this article are made: what you net together and which units you use.
Check your position at least once a day, preferably at the start of the day, and after every deal that changes it. For a practical morning routine, see What is a position list and why do traders check it every morning?
Want to see how the position list works with your own products and contracts? Reserveer een demo or neem contact met ons op.
Make your current sheet consistent first: one row per contract, the same unit throughout, and a delivery period on every line. Split positions by product and quality, and by month. That structure is also what you need when you move to trading software, so the work is not lost.
First check whether it is real. An imbalance is often caused by a missing contract, an unregistered delivery or a unit mismatch. If it is real, you can buy or sell to close it, agree different timing with your counterparty, close a contract through a washout, or reduce the price risk with futures. Record what you did and why.
Book the quantity in the period you expect it to be delivered and update it when the customer confirms the call-off. Keep the remaining open quantity per contract visible, so you can see what still needs to be called off before the contract expires.
Yes. Products and qualities with different prices and different buyers belong in separate positions. A consolidated view on top is useful for overall exposure, but take decisions on the detailed view.
Separate the quantity from the price. The quantity counts in your position from the moment the contract is signed. The price exposure stays open until the price is fixed, so track the unfixed quantity and the fixing date per contract, and value it at current market prices in the meantime.
