Milk futures hit record highs for the eighth month in a row, driving a boom in the production of domestic milk.
Futures for ClassIII milk, which influences the process of products like cheese, traded at $24.43 a hundred on Tuesday, an increase of above 25%.
According to International Business Times, US dairy producers shopped 17% of global milk production within the first 6 months of 2014, which marks yet another record for the US milk industry, as reported by Alan Levitt, spokesman for US Dairy Export Council.
Bloomberg quotes Jon Spainhour, a partner at Rice Dairy LLC as having said, “Usually, we use the first six months of the year to build the inventory we’re going to sell in the last six months. People are saying that ‘I know those important are coming in, but in the meantime, I’ve got to make sure I’ve got enough to get on the supermarket shelf.”
Spainhour added that an increase of dairy consumption in North America during autumn is experienced as the US football fans boost the orders for pizza. In addition, bakers require more supply of butter for holiday pastries and cake.
In the mean time, domestic cheese and milk consumption is expected to hit record highs at 4.88 million tons and 93.4 million metric tons respectively.
Spainhour said, “We just didn’t build the stock we needed to, and domestic cheese buyers are still scrambling to build that inventory.”
Dairy farmers are experiencing high profit margins as they pay low prices for soybeans and corn for feeding cattle. Despite the rise in US dairy consumption, the rising prices and booming production could lead to the prices falling, according to analysts.
As of July, the average price per gallon of whole, fortified milk was $3.65, a 5.7% rise from the same time last year.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of the story: Jonathan Millet at email@example.com