QUOTE AND NEWS
The Hindu Business Line  Aug 6  Comment 
Mid Valley Foods offers unadulterated milk from own farm
The Economic Times  Aug 2  Comment 
The government has proposed a ban on private producers to curb the use of the drug illegally in livestock to increase milk production.
The Hindu Business Line  Aug 1  Comment 
With a 17 per cent share in India’s milk production, Uttar Pradesh is key for the development of the country’s dairy sector. But the State, which prod
The Hindu Business Line  Jul 31  Comment 
₹80-a-litre price has made farm-fresh organic milk an attractive proposition
The Hindu Business Line  Jul 30  Comment 
R S Sodhi, Managing Director of the Gujarat Cooperative Milk Marketing Federation (GCMMF), speaks to BusinessLine on issues relating to milk prices, t
The Hindu Business Line  Jul 30  Comment 
India’s dairy industry is in a state of flux. The oversupply of milk is both a crisis and an opportunity for the stakeholders — dairy farmers, cooperatives and organised private players. Vishwanath Kulkarni reports
The Economic Times  Jul 29  Comment 
Farmers are in distress in key milk producing states like Maharasthra because of fall in the procurement rate amid surplus milk production, piling up of skimmed milk powder (SMP) and white butter stock.
The Hindu Business Line  Jul 27  Comment 
Markets should develop capacity to absorb higher milk, foodgrain output
The Hindu Business Line  Jul 27  Comment 
India’s milk production is estimated to have increased by 6.6 per cent to 176.35 million tonnes during the last financial year. “Milk production in
Financial Times  Jul 27  Comment 
Mead Johnson baby milk business helps consumer goods group halts string of disappointments




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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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