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Commodity - Essay Example

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Milk from numerous animals, especially cows, has for a long time been considered a regular stable food for many cultures worldwide. It provides dairy…
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Milk Performance in the Market 2007 Milk, together with the dairy product that is produced from it, is a source of food for a large number of people in the world. Milk from numerous animals, especially cows, has for a long time been considered a regular stable food for many cultures worldwide. It provides dairy products such as yogurt, cheese, kefir, and butter, and is a source of vitamin D, proteins, and calcium. However, not many people have wondered how it performs in the markets before it reaches to the consumer. This newsletter will look at its performance in the markets from 2007 to 2012, and will examine its inflation rate, rates of change, as well as its MCSI commodity index (Catlette & Hadden, 261)
Since 2007, according to Park (p8), milk prices have been on the decline, which has been a welcome development for milk consumers but a bad sign for the economy and a caution signal for a potential slowdown. Prices started going down during the 2002-03 and 2009 recessions, but later went up in 2001, 2004, 2007, and last year. However, in recent times, the prices of milk have been slowly and gradually declining since arriving at a historical peak in September 2011, going down to nearly 4% at the retail level and almost 25% of late at the distributer level (Park 9).
Currently, the price of one gallon of milk is $3.86, which is still high by historical standards, but they will definitely go down as the demand also goes down (Catlette & Hadden, 261). Between March and April 2012, the milk future contract has gone up by 6%, but it is expected to go down because of a milk cow head that s larger than expected. A domestic economy that is sluggish is not always good for milk prices, so the gradual decline of the price from 2007 to date is a warning sign that the national economy is on shaky ground.
Currently, milk products exports are estimated at 13% of production (Catlette & Hadden, 262), meaning that the low prices may be assign of a reduced demand for milk and its products n the global market.
Fig 1: Prices of milk from January 2007 to September 2010. Courtesy of Catlette, Bill & Hadden, Richard.
In spite of the maturity of the global market for the consumption of milk and its products, it has continued to grow both in terms of the retail volume and in terms of its value from 2007 to date. Milk consumption rose in emerging markets, giving support to worldwide volumes, as more wealthy consumers moved from consuming unprocessed milk to one that is processed, including milk products. In the mean time, the growth in real time retail value that is stronger has risen from a combination of higher costs of producing milk and an increase in demand for milk consumption. In the future, a continued focus on the innovation the production of milk and its products should bolster retail margins and values (Park p10).
Milk is a popular source of food for many cultures across the globe. Together with its products, it is a good source of proteins, calcium, and vitamin D. However, the prices of milk have been on a steady decline since 2007 to date, perhaps due to an increase in supply and the resulting reduction in demand. As much as this is an indicator of a slump in the economy, it is good news to consumers who can access the food at lower prices.
Works cited
Catlette, Bill & Hadden, Richard. Contented Cows Still Give Better Milk, Revised and Expanded: The Plain Truth about Employee Engagement and Your Bottom Line. New York: John Wiley & Sons. 2012. Print.
Park, Young W. Bioactive Components in Milk and Dairy Products. New York: John Wiley & Sons. 2009. Print. Read More
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