Today, ABC News reported that milk prices are expected to "soar" in the near future. The reasons?
- Reduced supply of milk supplies due to the drought in Australia (a milk exporter)
- Increased demand for milk in China, Canada and Mexico.
- Increased cost of feeding US dairy cows (that corn for ethanol thingee)
Powdered dairy products are traded globally and supplies are down, Leibtag said. He pointed to two recent changes that have had an impact on the international supply of dried dairy products: the European Union recently ended subsidies for dairy production, which has resulted in a reduction in supplies, and worse, Australia -- the world's second largest exporter of dairy products after the United States -- has been suffering through a severe drought for the past several years.
It "couldn't produce as much as it used to and world markets are looking for other sources of dairy," [...] largely to the United States.
How soon until these prices start to soar? July 1st
Price of milk spouts higher: All-time record is due July 1 -- a seventh monthly rise -- and cost ripples affect food firms.
Jun 27, 2007 -- You've got four more days to buy milk before the price goes up for the seventh month in a row -- this time, into record-high territory.
As supplies of the four globally traded dairy commodities that determine California milk prices continue to be tight, the minimum retail price for a gallon of low- or reduced-fat milk will reach an all-time high on July 1 of $3.10 a gallon -- up 55 percent from a year earlier.
And that's the rock-bottom price that many retailers reserve only for bulk purchases of 2 gallons or more. Consumers buying smaller quantities can expect to pay more.
[Likely] Translation: That's the Costco price.
From the ABC Report:
All combined -- high corn prices, increased global demand in the face of tight supplies, more costly transportation fees -- these factors translate to higher prices for that gallon of milk at the checkout.
They go on to point out how it sounds very familiar to the increase in prices at the gas pump.
"It's all supply and demand."
Well... Given how serious the drought is in Australia, I think the correlation is the environment (one giveth, the other taketh away) and the increased cost of transportation, not necessarily a case of gouging by the milk industry (a argument that cannot be made, imo, by the oil industry).
Australia suffers worst drought in 1,000 years
Depleted reservoirs, failed crops and arid farmland spark global warming tussle
Australia's blistering summer has only just begun but reservoir levels are dropping fast, crop forecasts have been slashed, and great swaths of the continent are entering what scientists yesterday called a "one in a thousand years drought".
"The cattle and feed industry is getting decimated," said Brian Rice of Rice Dairy, an independent dairy trader, of the situation in Australia. "Their milk production is down because it is very hot and very dry."
Got [any] Milk [left]? You know, that liquid canary in the global milk mine, one of many products that used to be taken for granted and now may very well be on its way to becoming a luxury that those who need it most cannot afford????
Peak Oil, Peak Milk, Peak [fill in blank here]
Milk Derivatives (likely to be impacted):
- Butter Fat
- Butter Oil
- Cappuccino Mix
- Coffee Whitener
- Condensed Milks
- Cream Cheese
- Cultured Milk Products
- Dairy Products
- Dessert, Pudding and Mousse
- Ice Cream
- Pudding and Desserts
- Soft Cheese/Fresh Cheese
- Sweetened Condensed Milk
- UF Feta
- Whey / Whey pre-treatment
- Whey Protein
- Soy Milk
- Rice Milk
- Almond Milk
- Oat Milk
- Soy Yogurt (plain and frozen)
- Soy Ice Cream
- Rice Ice Cream
Here's a link to the ABC story.
To the McClatchy Report from Futures and Commodity Market News
And the one about the (1000 year) drought in Australia.