QUOTE AND NEWS
The Economic Times  Apr 27  Comment 
Parag is an integrated dairy company with presence in over twenty product categories. PMF has been one of early movers to garner share in the branded space.
guardian.co.uk  Apr 27  Comment 
To be truly sustainable, companies must reconcile the different marketing messages they use around the world You might not realise it when you walk along the aisles of your local supermarket, but you are surrounded by marketing messages. These...
New York Times  Apr 27  Comment 
Facing tough competition from newer yogurt makers, the company is establishing animal welfare and conservation standards for its milk suppliers.
The Australian  Apr 26  Comment 
Murray Goulburn boss Gary Helou has stepped down after a massive profit downgrade and a cut in milk prices.
The Economic Times  Apr 26  Comment 
The retail price of milk is unlikely to increase in the next two months as dairy companies are left with huge stocks of milk powder from last year and exports are unviable due to lower prices overseas.
The Economic Times  Apr 26  Comment 
Parag Milk Foods which sells dairy products under the 'Gowardhan' and 'Go' brand is set to hit the capital market with its issue between May 4 and May 6.
The Australian  Apr 25  Comment 
Investors and dairy farmers are bracing for the worst from Murray Goulburn.
Motley Fool  Apr 25  Comment 
The leading theme-park operator tries to milk more money out of its Disney World guests' milk money.
The Economic Times  Apr 25  Comment 
The issue is being managed by Kotak Mahindra Capital, JM Financial Institutional Securities, IDFC Securities and Motilal Oswal Investment Advisors.




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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

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