prices in general have risen substantially since last year:
The cost of butter fat is up about 20% from last year. The price of fat last year was $1.20 vs. current cost of $1.59 now.
The price of solids in non fat is up about 35% vs. last year. The cost last year was .82 cents where it is now @ 1.30
Although we are now in the flush season the costs keep increasing and therefore we see no decrease for the future. Prices between now and the end of the year will probably fluctuate .05 per pound. Domestic pricing is also pegged into the world market and the world market is definitely short and therefore prices are very high.
With milk production down but the economy slowly gaining strength, demand for milk and dairy products has begun to outrun supply. This past week we have seen sensational advances in individual milk products. As a result the industry is seeing widespread hoarding as milk product producers and distributors increasingly questioned milk availability, especially for the upcoming summer months.
Production is declining, and you can't simply turn cows on and of. Heading into this year, the nation had the lowest number of dairy cows since any time in the last five years. About 9 million dairy cows are in the supply chain now, vs. more than 9.1 million from the year earlier.
One factor for this is a clampdown on importation of cows from Canada due to concern about mad cow disease. Another is that soy feed prices have gone up, discouraging dairy farmers from adding to their herds.
Food Manufacturers and users alike are looking for potential substitutes or are simply becoming more active buyers.
We have all seen the increases in butter, cheese, and milk pricing recently.
Here are some of the reasons that we have heard that are causing the markets to
1- Our government does not permit any import of Canadian cattle at this time. This is causing a shortage of milk producing stock.
2- The 2003 hot summer has affected the number of cows that will reproduce reducing stock again.
3- The quality of the feed given to cattle is down and the cost of product is up making farmers evaluate how big there herds should be.
4- Monsanto produces a chemical needed to be given to cows so that milk is produced. There is not enough of this product available and therefore fewer cows are producing milk.
5- There is a general reduction of milk herds again reducing the available amount of flow.
Normally as we move into the spring flow we should see plenty of fluid milk available, but because of the reasons given above this will not happen this year. There have been some predictions that prices will continue to increase through all of 2004. The consumption of cheese and butter is also contributing to the pressure of higher prices.
Remember the amount of available milk is the basis of pricing of all dairy products.