Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Atif Rahim - JP Morgan.
Atif Rahim - JP Morgan
I guess going back to your comments from last quarter. You had mentioned, you were seeing signs of some bottoming out and perhaps that may have happened based on your comments, but you’re expecting revenues to be down sequentially next quarter. So is that a change from which you had seen, or do you think things have actually gone better, but you just had some revenues perhaps pull through to the fourth quarter of this year?
Bill Lacey
The markets are pretty much as we anticipated from next quarter, when we look at them earlier. We do see in the future milk markets improvement. It is down, but it’s not down to where we thought we would be in first quarter.
James Robison
I think the credit issue is that losses are reducing, but they are still losses and the operators still have very strained balance sheets. Every month as the futures market roles into the stock market, the prices slide.
They are up from around $10 [hundredweight] for milk to just over $12. Breakevens are down from the high teens to the $13 range generally speaking. The reality is, our customers continue to loss money though and given the severe strength they had over the last 10 months or so until they start to make money, I think they are going to be restrained in the purchases.
Atif Rahim - JP Morgan
Do you think the breakeven is still around $12 to $12.50, you mentioned and as we look out, I haven’t seen the futures lately, but do those get better around the third quarter and then why you think there’s a turnaround for you guys around that time?
Bill Lacey
If you look at the December futures right now they’re about $13, $15 and they get up to $14 in April. So certainly, that’s above the breakeven level, we believe right now. That’s all predicated on what the efficiency of dairy. A very large dairy is going to be above breakeven, some of the smaller one below it.
Operator
Your next question comes from Mark Arnold - Piper Jaffray.
Mark Arnold - Piper Jaffray
Can you comment on just the bad debt provision? Is that rebate still something that you might collect, or what’s the progress there?
James Robison
We believe that it’s unlikely, that’s when we setup a provision for it. We have not written it off yet. We will continue to pursue that, but it’s not likely reserve, that’s a 100% reserve for that rebate.
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