QUOTE AND NEWS
Wall Street Journal  4 hrs ago  Comment 
Dairy giant Fonterra Co-Operative Group Ltd. lowered its forecast for payouts to farmers and signaled further downside risk amid declines in global dairy prices.
USDA NASS  Sep 22  Comment 
USDA NASS Michigan : 09-22-2014: August Milk Production Agriculture Report
USDA NASS  Sep 19  Comment 
August Milk Production up 2.6 Percent. Milk production in the 23 major States during August totaled 16.2 billion pounds, up 2.6 percent from August 2013...
Agrimoney.com  Sep 18  Comment 
The number of dairy cows of breeding age soars, as farmers prepare for the removal of production quotas. Still, lower milk prices lie ahead
The Australian  Sep 17  Comment 
THE premium milk company backed by Sydney’s Perich family is in advanced negotiations to sell fresh Australian milk.
Agrimoney.com  Sep 17  Comment 
Dairy prices at GlobalDairyTrade break a losing spree, with milk values rising. Still, there is no sign yet that Chinese buyers have returned
MedPage Today  Sep 16  Comment 
VIENNA (MedPage Today) -- Eating a lot of fatty dairy products, such as cream and fermented milk, seemed to lower the risk of type 2 diabetes development, Swedish researchers said here.
The Hindu Business Line  Sep 16  Comment 
States need to reduce wastage of milk by expanding the cold chain infrastructure in rural areas to collect and preserve milk till it is collected for sale or taken for processing, Agricultu...
Wall Street Journal  Sep 16  Comment 
Ireland's main dairy cooperative is betting that Americans will be willing to trade up for more expensive, imported butter and cheese even amid already record dairy prices.




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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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