Milk futures: Better than gold# Stock
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http://money.cnn.com/2012/01/04/markets/milk_futures/index.htm
NEW YORK (CNNMoney) -- The commodity which enjoyed the biggest gain in price
last year can be answered with a simple question: Got milk?
That's because milk, not gold, oil, or any of the more popular futures
contracts, enjoyed about a 35.7% rise in price in 2011 to close at 18.77
cents per pound.
PrintComment
That compares to an 11.7% rise in the price of gold and a 10% rise in crude
oil prices. It also blows away the more modest gains of the higher profile
food futures, like pork bellies, corn and coffee.
But before you rush out to the nearest grocery store to buy every drop of
milk in an effort to build your retirement nest egg, a clarification: Milk
futures are not for the type of milk consumers bring home in gallon jugs.
They're for a class of milk that is typically powdered or condensed and used
in production of other products such as cheese. That class of milk makes up
just more than half of the 195 billion pounds of milk produced in the
United States annually.
The price of liquid milk bought by consumers has so far been spared these
price shocks. Still, the Consumer Price Index shows a 9.8% rise in liquid
milk prices over the 12 months ending in November.
Investors fleeing gold
One of the main factors driving the rise in milk futures on commodity
markets is a rise in export demand.
Because of its perishable nature, liquid milk is not widely exported. But
the Census Bureau reports that condensed or powered milk exports surged 26%
in the first 10 months of 2011, the latest figures available, to $1.3
billion.
"We still use most of our production for domestic commercial needs, but the
driver of the market is really the export market," said David Lehman,
managing director of commodity research at CME.
0:00 / 3:08 Investors flip farmland for cash, not crops
Countries in Asia and South America had some of the biggest increases in U.S
. milk imports.
But while the rising prices have been good news for dairy farmers and other
producers, it hasn't been the windfall that outsiders might expect, said Jim
Tillison, senior vice president of marketing and economics for the National
Milk Producers Federation, a trade group.
"Feed costs are up as well so it's not a record breaking year, but it's
better than the past couple of years," he said.
First Published: January 4, 2012: 1:04 PM ET
NEW YORK (CNNMoney) -- The commodity which enjoyed the biggest gain in price
last year can be answered with a simple question: Got milk?
That's because milk, not gold, oil, or any of the more popular futures
contracts, enjoyed about a 35.7% rise in price in 2011 to close at 18.77
cents per pound.
PrintComment
That compares to an 11.7% rise in the price of gold and a 10% rise in crude
oil prices. It also blows away the more modest gains of the higher profile
food futures, like pork bellies, corn and coffee.
But before you rush out to the nearest grocery store to buy every drop of
milk in an effort to build your retirement nest egg, a clarification: Milk
futures are not for the type of milk consumers bring home in gallon jugs.
They're for a class of milk that is typically powdered or condensed and used
in production of other products such as cheese. That class of milk makes up
just more than half of the 195 billion pounds of milk produced in the
United States annually.
The price of liquid milk bought by consumers has so far been spared these
price shocks. Still, the Consumer Price Index shows a 9.8% rise in liquid
milk prices over the 12 months ending in November.
Investors fleeing gold
One of the main factors driving the rise in milk futures on commodity
markets is a rise in export demand.
Because of its perishable nature, liquid milk is not widely exported. But
the Census Bureau reports that condensed or powered milk exports surged 26%
in the first 10 months of 2011, the latest figures available, to $1.3
billion.
"We still use most of our production for domestic commercial needs, but the
driver of the market is really the export market," said David Lehman,
managing director of commodity research at CME.
0:00 / 3:08 Investors flip farmland for cash, not crops
Countries in Asia and South America had some of the biggest increases in U.S
. milk imports.
But while the rising prices have been good news for dairy farmers and other
producers, it hasn't been the windfall that outsiders might expect, said Jim
Tillison, senior vice president of marketing and economics for the National
Milk Producers Federation, a trade group.
"Feed costs are up as well so it's not a record breaking year, but it's
better than the past couple of years," he said.
First Published: January 4, 2012: 1:04 PM ET
