Evidence of man's use of animal milk as food was discovered in a temple in the Euphrates Valley near Babylon, dating back to 3,000 BC. Humans drink the milk produced from a variety of domesticated mammals, including cows, goats, sheep, camels, reindeer, buffaloes, and llama. In India, half of all milk consumed is from water buffalo. Camels' milk spoils slower than other types of milk in the hot desert, but the vast majority of milk used for commercial production and consumption comes from cows.
Milk directly from a cow in its natural form is called raw milk. Raw milk is processed by spinning it in a centrifuge, homogenizing it to create a consistent texture (i.e., by forcing hot milk under high pressure through small nozzles), and then sterilizing it through pasteurization (i.e., heating to a high temperature for a specified length of time to destroy pathogenic bacteria). Condensed, powdered, and evaporated milk are produced by evaporating some or all of the water content. Whole milk contains 3.5% milk fat. Lower-fat milks include 2% low-fat milk, 1% low- fat milk, and skim milk, which has only 1/2 gram of milk fat per serving.
The CME Group has three different milk futures contracts: Milk Class III which is milk used in the manufacturing of cheese, Milk Class IV which is milk used in the production of butter and all dried milk products, and Nonfat Dry Milk which is used in commercial or consumer cooking or to reconstitute nonfat milk by the consumer. The Milk Class III contract has the largest volume and open interest.
Prices - The average monthly price received by farmers for all milk sold to plants in 2014 rose by +19.6% yr/yr to $23.98 per hundred pounds, a new record high.
Supply - World milk production in 2015 is expected to rise +2.1% to 582.521 million metric tons. The biggest producers will be the European Union with 26.1% of world production, India with 25.2%, and the U.S. with 16.5%. U.S. 2014 milk production in pounds is expected to rise +2.4% yr/yr to 205.994 billion pounds, setting a new record high. The number of dairy cows on U.S. farms has fallen sharply in the past 3 decades from the 12 million seen in 1970. In 2014, there were 9.255 million dairy cows on U.S. farms, down -0.4% yr/yr. Dairy farmers have been able to increase milk production even with fewer cows because of a dramatic increase in milk yield per cow. In 2014, the average cow produced 22,259 pounds of milk per year, more than double the 9,751 pounds seen in 1970.
Demand - Per capita consumption of milk in the U.S. fell to a new record low of 204 pounds per year in 2008 (latest data), down sharply by -26% from 277 pounds in 1977. The utilization breakdown for 2002 (latest data) shows the largest manufacturing usage categories are cheese (64.504 billion pounds of milk) and creamery butter (30.250 billion pounds).
Trade - U.S. imports of milk in 2014 rose +13.5% yr/yr to 4.200 billion pounds, still well below the record high of 7.500 billion pounds posted in 2005-06.
Articles from the Commodity Research Bureau (CRB) Commodity Yearbook. The single most comprehensive source of commodity and futures market information available, the Yearbook is the book of record of the Commodity Research Bureau, which is, in turn, the organization of record for the commodity industry itself. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope is second to none. Additional information can be found at www.crbyearbook.com.