Butter Futures Expected Lower With Milk Production Increase

Butter eaters around the world will delight with an extra helping as wholesale milk prices continue to drop from all-time highs in September. Dairies have kept the milk flowing like never before the former high milk (futures) prices have helped to expand production around the world.

USDA data shows farmers have taken advantage of the spike in milk prices as well as low animal-feed costs which has sent production for the year ending in October up almost 2% from the same period last year. Top producers around the globe are contributing to the global milk glut with our domestic dairy exports dropping to a year and a half low.

The all-time milk (futures) highs this past September drew a tremendous response from dairies “down under” and Europe,” said Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, sharing his fundamental analysis insight regarding the current milk futures situation. Medina added, With more milk & butter on the int’l market, our domestic brands have backed-up putting pressure on milk (futures) & butter (futures) prices. That simple.”

As with falling oil (lowering transportation costs) and overall commodity prices, milk futures and butter futures are not immune to glut prices. We don’t trade butter futures or milk futures from the Chicago Mercantile Exchange, but this human interest story is out to assure the financially “tapped-out” public that the pendulum does indeed swing the other way!

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