QUOTE AND NEWS
Motley Fool  Feb 12  Comment 
With an expected shortage of organic milk, Coke could make a killing on Fairlife.
Forbes  Feb 12  Comment 
Every morning at Starbucks I order a grande cappuccino with an extra shot of espresso, “easy on the foam.” Without fail, Amanda, my local barista, delivers my coffee exactly as I ordered it. Across the country in thousands of Starbucks stores...
Agrimoney.com  Feb 11  Comment 
There are "signs" of some Chinese buyers returning to the market, while milk production prospects are tailing off, Dairy Australia says
New York Times  Feb 11  Comment 
Earnings also dropped for the snack-food company, which has grappled with higher costs for cocoa and milk, crucial ingredients in many of its products.
DailyFinance  Feb 11  Comment 
Filed under: Company News, Starbucks, Market News, Restaurants, Investing Matt Rourke/AP Fans of premium brews will get a new option at Starbucks (SBUX) next week. Baristas will begin offering coconut milk as an option in patron beverages...
DailyFinance  Feb 10  Comment 
Filed under: Coca-Cola Company, Consumer Goods, Food & Beverage, Products, Investing Michael Conroy/AP Coca-Cola (KO) is entering the premium milk market, hoping that a lactose-free dairy alternative can help it offset moribund sales of its...
The Hindu Business Line  Feb 10  Comment 
Dairy products giant Amul does not have any plans to raise milk prices for next 4-5 months but it would review the price situation during the monsoon season, a top official of the company said tod...
TheStreet.com  Feb 9  Comment 
NEW YORK (TheStreet) -- Dean Foods doesn't always get mentioned when discussing some of the best food stocks on the market, but this Dallas-based dairy company is operating on all cylinders. Helped by its ongoing strategic initiatives and its...
New York Times  Feb 6  Comment 
Christina Tosi shares a recipe for rosemary nuts, excerpted exclusively for T from her next cookbook.
MarketWatch  Feb 5  Comment 
Acquiescing to popular demand, Starbucks will soon offer coconut milk at all its U.S. stores.




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"Milk" redirects here. For the actual futures contract on the CME please see milk futures.

In the US, dairy has a farm value of production that makes it second only to beef [1]. Despite increasing efficiency of production, domestic dairy demand has remained so high that US dairy farmers have found little incentive to export abroad. Significant export activity is limited to powdered milk and cheese to Mexico. But as seen in Chart 1, the US imports large quantities of dairy products, especially relatively expensive cheese products from the European Union.

See Beef Prices for more on US beef production and consumption, and the Dairy Products page for more on this industry.

The chart at left shows continuos front-month futures prices for Milk traded on the Chicago Mercantile Exchange.

Overview

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Chart 1. Image from the USDA.
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Chart 2. Data from the USDA.

Dairy prices are historically relatively stable. However, even small fluctuations in price can have a big effect on related companies. The USDA projects that a slight increase in the number of milk-producing cows and increasing milk production efficiency will result in a continued drop in domestic dairy prices.

The USDA forecasted the 2007 all milk price 10 cents higher than the earlier $19.05 prediction to $19.15. In 2008, the all milk price forecast is increased from $18.00 to $18.80. The minimum price of raw milk is regulated in most parts of the country by the government at $9.90, but ever since Cooperatives Working Together (CWT), a dairy farmers group, put into place initiatives in 2002 to control milk supply by retiring herds, milk price have shot up and have remained around $14.

[1]


Who wins from lower domestic dairy prices?


Who loses from lower domestic dairy prices?

  • Hain Celestial Group (HAIN) is a major producer of soy products, often seen as competing with dairy products for demand and consumption. Lower dairy prices may worsen the price difference and discourage commercial consumers from turning to slightly pricier soy alternatives.
  • AspenBio Pharma (OTC:APNB) and other companies that derive significant profit from manufacturing dairy-related bovine hormones may feel the strain of lower dairy prices through the purchasing capacity and demand of bovine farmers for more yield-increasing drugs.

The New Export Market

A growing export market may counteract the effect of domestic dairy price drops. Chinese dairy consumption is growing at an annual 15%, and many other developing countries weigh in at about 10%--comparing such numbers to the US's annual domestic consumption growth of a paltry 0.4% has led many to believe that China could be the US's next big dairy surplus export market.

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