QUOTE AND NEWS
Forbes  Jul 23  Comment 
Milk once came in two varieties: whole and skim. Then, producers added 2% and 1%. Today, shelves are full of milk from hemp, soy, coconut, and almonds. It can be lactose-free, or organic; probably it can be made from birch bark.
Agrimoney.com  Jul 23  Comment 
The bank cuts hopes for near-term milk prices in top exporter New Zealand to levels well below those Fonterra expects. But better times lie ahead
The Hindu Business Line  Jul 22  Comment 
‘It cannot be clubbed with other agri products given its perishable nature’
Agrimoney.com  Jul 22  Comment 
With dairy prices slumping, global industry interest is moving from commodity milk powders to more specialised products
Wall Street Journal  Jul 22  Comment 
Coca-Cola showed improvement in the second quarter, fueled not by soda, but by noncarbonated drinks like tea, bottled water and ultra-filtered nutrient-rich milk.
Forbes  Jul 22  Comment 
The horrific Iran nuclear deal is, these days, overshadowing the miracle of the Israeli economy, particularly in the area of high technology. With the exception of the U.S., Israel--a country of a mere 8 million people--leads the world in high...
USDA NASS  Jul 21  Comment 
June Milk Production up 0.7 Percent. Milk production in the 23 major States during June totaled 16.4 billion pounds, up 0.7 percent from June 2014. May...
The Australian  Jul 21  Comment 
Forbes  Jul 21  Comment 
As a Canadian student working in the U.S., I’ve had to acclimatize to several key differences between the two countries. For example, the transition from bagged milk (yes, we buy our milk in bags) to unwieldy jugs took some getting used to. And...
newratings.com  Jul 21  Comment 
CANBERA (dpa-AFX) - The New Zealand dollar continued to be strong against the other major currencies in the Asian session on Tuesday after the nation's Finance Minister Bill English said dairy prices may recover at the end of this year. Bill...




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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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