Nonfat Dry Milk Sep '22 (DFU22)
|Contract||Non Fat Dry Milk|
|Tick Size||0.025 per pound ($11.00 per contract)|
|Daily Limit||4 cents per pound ($1,760 per contract) Expanded limit 8 cents|
|Contract Size||44,000 pounds of Grade A and Extra Grade Dry Milk|
|Trading Hours||5:00p.m. - 4:00p.m. Sun-Thur, 5:00p.m. - 1:55p.m. Fri CST|
|Value of One Futures Unit||$440|
|Value of One Options Unit||$440|
|Last Trading Day||Business day prior to USDA Milk Price announcement|
Evidence of human consumption of animal milk 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 virtually all 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 2021 rose by +2.4% yr/yr to $18.69 per hundred pounds, remaining well below the 2014 record high of $23.98.
Supply - World milk production in 2022 is expected to rise +1.2% to 663.873 million metric tons, a new record high. The biggest producers are expected to be India with 30.7% of world production, the European Union with 22.8%, and the U.S. with 15.6%. U.S. 2021 milk production rose +1.4% yr/yr to 226.276 billion pounds, setting a record high.
The number of dairy cows on U.S. farms has fallen sharply in the past three decades from the 12 million level seen in 1970. In 2021, there were a record-low 8.448 million dairy cows on U.S. farms, down -10.0% 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 2021, the average cow produced a record 23,948 pounds of milk per year, a +0.7% yr/yr increase, more than double the 9,751 pounds seen in 1970.
Trade - U.S. imports of milk in 2021 were unchanged yr/yr at 6.600 billion pounds, still well below the record high of 7.500 billion pounds posted in 2005-06.
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