QUOTE AND NEWS
New York Times  Oct 23  Comment 
The 92nd Street Y is marking the centennial of Dylan Thomas’s birth with an exhibition and a revival of his 1953 radio play “Under Milk Wood” this weekend.
New York Times  Oct 23  Comment 
Children who drink rice, almond or soy milk instead of cow’s milk may have insufficient levels of vitamin D.
Agrimoney.com  Oct 22  Comment 
Milk output in New Zealand, the top exporter, will keep rising, US officials say, flagging the potential for a slow revival in payouts to farmers
Agrimoney.com  Oct 21  Comment 
New Zealand retail-to-land agency group PGG Wrightson sees the downturn in milk prices as only a short-term factor
USDA NASS  Oct 20  Comment 
September Milk Production up 4.1 Percent. Milk production in the 23 major States during September totaled 15.5 billion pounds, up 4.1 percent from...
The Hindu Business Line  Oct 20  Comment 
There is an urgent need to improve indigenous bovine breeds if milk yields are to rise, Minister of State for Agriculture Sanjeev Balyan said here on Monday. Despite being the largest mil...
The Australian  Oct 17  Comment 
SAPUTO has slammed Australia’s supermarket duopoly for selling milk cheaper than water.
Agrimoney.com  Oct 16  Comment 
Prices rise at GlobalDairyTrade for only the fourth time in 2014, and hours after Danone flags increases in milk prices outside the EU and US
The Hindu Business Line  Oct 15  Comment 
In the age of better-informed consumers and omnipresent social media platforms, it isn’t surprising that manufacturers are being held accountable for their wares. Gujarat Cooperative Mil...




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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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