Prices of corn, soybeans and live cattle have gone up recently in commodity markets throughout the world. However, milk prices have not caught up to the price increases as others and it is bound to go up in coming months. When milk prices start to go up, rising prices may continue for a while. Here’s why.
The benchmark diary contract, CME Class III, is closer to the all-time high of $21.62 per hundredweight. China still imports huge amounts of powdered milk.
The global production of milk is at a standstill, according to some analysts who are specializing in commodities. The ever continuing drought in the Midwest is affecting the production by destroying cultivations in some areas altogether. Also when outside temperature increase, cows produce less milk. Since the drought affects food production, grain prices are near all-time high. It makes farming unprofitable and some farmers are reducing or selling their herds altogether. The nation’s top milk producing California has seen the milk production go down by 5.8 percent just in August 2012. According to the Department of Agriculture, the nationwide milk output has decreased by 0.3 percent in three years. The result will be higher prices for milk in coming months.