Agrimoney.com  Aug 28  Comment 
New Zealand's Westland, cutting its milk price forecast, and Dutch-based Friesland, unveiling a profits fall, flag clouds over world dairy demand
Japan Today  Aug 27  Comment 
Cold Stone Creamery has launched a new yogurt concept in Japan by the name of Cold Stone Frozen Bar. Cold Stone Frozen Bar is a fresh and better-for-you dessert concept that uses milk, yogurt and a blend of fresh fruit. Customers choose mix-ins...
The Hindu Business Line  Aug 27  Comment 
NCR’s lucrative milk market becomes a battleground for Amul co-ops
The Hindu Business Line  Aug 27  Comment 
It is a well-known fact that Gujarat Cooperative Milk Marketing Federation (GCMMF) is India’s largest dairy concern.Less known, however, is the size of some of its constituent district-l...
Financial Times  Aug 27  Comment 
World’s biggest milk supplier to invest NZ$615m for a stake in Chinese baby formula maker Beingmate to capitalise on surging mainland demand
New York Times  Aug 27  Comment 
The New Zealand dairy giant Fonterra, scarred in a past scandal in China, is the latest outsider betting on trying to bring in safer food.
newratings.com  Aug 27  Comment 
CANBERA (dpa-AFX) - The NZ dollar strengthened against the other major currencies in the Asian session on Wednesday, after the nation's diary giant Fonterra maintained its forecast for farmer payouts for the 2014/15 season. Data from the...
SeekingAlpha  Aug 26  Comment 
By Anthony Thorpe: Current Price: $16.05/share Market Cap: $1.5 billion Enterprise Value: $2.4 billion 1-year target price range: $24.00-$26.00/share (~50%-60% upside) I am continuing to build a long position in Dean Foods (NYSE:DF) with the...
The Economic Times  Aug 26  Comment 
Bhangoo’s story is similar to that of Sahara group’s Subrata Roy. Both run business empires whose functioning, critics say, is opaque.
The Hindu Business Line  Aug 26  Comment 
The National Dairy Development Board (NDDB) has said India must increase the average incremental milk production from 4 million tons (mt) in the last 10 years to 7.8 mt in the next 8 years...


"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.


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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.


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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