babalu87 said:
Even more good news..........
(broken link removed to http://www.nj.com/business/ledger/index.ssf?/base/business-6/1181018191176330.xml&coll=1)
Retail milk prices have crept higher in recent months, echoing dramatic spikes on the Chicago Mercantile Exchange, where millions of dollars in milk, cheese, butter and other dairy commodities are sold each day and eventually find their way into chocolate bars and boxes of macaroni and cheese. The price of a 40-pound block of cheddar hit $185.50 on the exchange Thursday -- up 53 percent from $121 a year earlier. ..........................Dairy market forecasters are warning consumers can expect a sharp increase in dairy prices this summer. By June, the milk futures market predicts, the price paid to farmers will have increased 50 percent this year -- driven by higher costs of transporting milk to market and increased demand for corn to produce ethanol. ................Dairy industry experts see more price increases on the horizon, and they blame such disconnected phenomena as increased milk drinking by the Chinese, a drought in Australia that squeezed milk production and ethanol plants that are crowding out cows at the nation's corn trough.
Of course those "in the know" will have some type of spin on this I am sure
It would have been good if you had included the paragraph from the article that quoted the industry spokesman to say prices were expected to move lower in 2008 as producers increased milk supply to meet growing demand. Production and distribution costs for agriculture be it corn producers or dairy producers are substantially higher because of "Energy" costs. Energy costs will drive food prices higher even though there is often a market lag in commodity prices for corn, soybeans, wheat, oats, milk, cheese, beef, poultry, pork, etc. The food processors have been doing alright even though farm incomes have suffered the disconnect between rising energy costs and commodity prices with some assistance from government subsidies. Check out ADM, Tyson, Kellogs, and Walmarts earnings. They have fared much better than agricuture producers earnings over the past few years and many have hedged raw material costs in the markets buffering their earnings from the increase in commodity prices while unapologetically raising prices on consumers. How many of those compalining about rising food costs own stock in any of these processors and retailers and have enjoyed the benefit of stock appreciation at the expense of manufacturing and agriculture for the past two decades? How many of those complaining about rising food costs have been vocal in resisting and active in frustrating unapologetic domestic energy development in the U.S. to meet growing energy demand for the past two decades? No new refineries, No LNG terminals along America's coasts, No new coal fired electric generation, No new Nuclear generation, No oil and natural gas exploration off America's Coast or in ANWR, No ethanol, No biodiesel. No real energy development sufficient to meet growing demand. Energy still powers the economy and will ultimately affect the prices of all other commodities and products even in the information age. There has been a lag for many reasons including stagnant wages, improved efficiencies, and excess capacity in global markets but we are likely reaching the limit of these factors influence on restraining prices. Is this really surprising? The effect of supply and demand on market prices should not be a surprise to anyone. The expansive effect of rising energy prices on other prices should not be a surprise to anyone.
Global demand is growing giving new life to commodity markets with higher prices increasing the incentive to produce more supply. Economics 101 at work. I have more trust in free markets than command and control government policy that inevitably leads to mass shortages and extreme rationing of products and services. Blaming corn prices that only recently are reflecting higher production (Energy) costs for driving food prices higher is a stretch from reality. No spin just the facts.