QUOTE AND NEWS
Wall Street Journal  Apr 4  Comment 
New Zealand dairy company Fonterra will pay a $256,350 fine for charges stemming from last year's recall of some dairy products.
Bloomberg  Apr 4  Comment 
1:07 April 4 (Bloomberg) –- Fifteen...
WA Business News  Apr 3  Comment 
Beverages giant Lion says being dumped as Woolworths' milk supplier in Western Australia for rival Brownes will affect production volumes at its Bentley milk processing plant.
The Hindu Business Line  Apr 1  Comment 
Milk cooperative major, Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), which markets milk products under the Amul brand, has registered a 32 per cent growth in sales turnover f...
The Hindu Business Line  Apr 1  Comment 
The Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets the Amul brand of milk and dairy products, has been conferred with the CNN-IBN “Innovating for a Better Tomorrow” Aw...
The Hindu Business Line  Apr 1  Comment 
The Australian  Apr 1  Comment 
ITALIAN food giant Parmalat has snapped up West Australian milk producer Harvey Fresh for $117.6m.
The Australian  Apr 1  Comment 
WHILE Australian agribusiness looks wistfully at Asia, our Kiwi competitors have been quietly milking it for all it is worth.
FX Street  Apr 1  Comment 
DailyFinance  Apr 1  Comment 
OTTAWA, ONTARIO -- (Marketwired) -- 04/01/14 -- Product photos are available at http://bit.ly/1giWlCf Sunrise Bakery Ltd. is recalling Sunrise Bakery brand Macaroon Cookies from the marketplace because they contain milk which is not declared on...
WA Business News  Apr 1  Comment 
Harvey Fresh has been acquired by Italian dairy giant Parmalat in a deal which values the Western Australian milk and fruit juice company at about $117 million.
The Australian  Apr 1  Comment 
ITALIAN giant Parmalat has bought control of Western Australian milk and fruit juice company Harvey Fresh.




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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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