QUOTE AND NEWS
Agrimoney.com  Aug 22  Comment 
The European Commission may extend to dairy its support programme for agriculture groups affected by Russia's ban on EU food imports
Insurance Journal  Aug 22  Comment 
A Chinese retailer is offering insurance to customers who buy infant milk powder, highlighting the lengths to which companies are going to address concerns about food safety in China. Suning Commerce Group Ltd, which owns the Redbaby chain of...
Motley Fool  Aug 20  Comment 
What you need to know about the dairy products industry.
Times Online  Aug 20  Comment 
Two of Britain’s favourite cheeses are under threat because the breed of cow from which they are made is dying...
New York Times  Aug 20  Comment 
The California Milk Processor Board asked two ad agencies, one of which specializes in Spanish-speaking consumers, to work together on a single new ad campaign with broad appeal.
USDA NASS  Aug 19  Comment 
July Milk Production up 4.0 Percent. Milk production in the 23 major States during July totaled 16.4 billion pounds, up 4.0 percent from July 2013. June...
Finance Asia  Aug 18  Comment 
Fraser and Neave purchased 15 million shares in the dairy milk company in Vietnam's fifth-largest equity capital markets deal in a decade.
SeekingAlpha  Aug 18  Comment 
By Asean Century: Lifeway Foods (NASDAQ:LWAY) reported Q2 EPS of $0.07. This beat expectations by three cents, but was two cents lower than last year. Revenues grew 28.1% y/y to $29.6 million and were $2.38 million higher than analysts had...
The Australian  Aug 14  Comment 
THE first public firm to specialise in buying, owing and developing large corporate dairy farms in Victoria has raised $8.5 million.
Benzinga  Aug 12  Comment 
In a report published Tuesday, Credit Suisse analyst Robert Moskow upgraded the rating on Dean Foods Company (NYSE: DF) from Neutral to Outperform, and raised the price target from $15.00 to $18.00. In the report, Credit Suisse noted, “Dean...




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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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