QUOTE AND NEWS
Agrimoney.com  Mar 16  Comment 
Fonterra blames drought for a drop in New Zealand milk collections last month, even as Cyclone Pam brings up to 6 inches of rain
TheStreet.com  Mar 11  Comment 
NEW YORK (The Deal) -- Yogurt makers the Icelandic Milk and Skyr, parent of the Siggi's yogurt label, and Wallaby Yogurt have both hit the auction block, according to industry sources, hoping to seal deals in the coming months. Both private...
BBC News  Mar 10  Comment 
A New Zealand national farming body and dairy giant Fonterra are sent threats to poison milk powder in an apparent pesticide protest, say officials.
The Hindu Business Line  Mar 10  Comment 
Australian shares reversed early gains to end flat on Tuesday and the NZX sagged after police said threats had been made to poison baby formula from New Zealand milk producers.New Zealand’s...
Agrimoney.com  Mar 9  Comment 
Milk deliveries in the world's top producer will rise this year, but at a far slower rate than last year, despite an end to output restrictions
USAToday.com  Mar 9  Comment 
Kids Meals at BK will now come with milk, juice or chocolate milk.
NPR  Mar 8  Comment 
Random tests of milk reveal that a few farmers are treating dairy cows with antibiotics that aren't supposed to be used on them. The FDA is now considering tighter controls to prevent such practices.
New York Times  Mar 4  Comment 
McDonald's says it plans to start using chicken raised without antibiotics important to human medicine and milk from cows that are not treated with the artificial growth hormone rbST.
Agrimoney.com  Mar 3  Comment 
Dairy prices rise at GlobalDairyTrade, but at a far slower rate, as whole milk powder proves reluctant to rise further above $3,000 a tonne
The Hindu Business Line  Mar 1  Comment 
Both past and present Governments have gone all-out to milk revenues from cigarette sales and discourage cigarette consumption. Excise duties on cigarettes of various lengths have been rev...




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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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