Milk

Milk is a consumer staple, which is most commonly thought of as a household item. Despite this, milk can still be a lucrative commodity as it offers an opportunity on consumption trends and on the state of the overall agricultural world.

Livestock farmers face a number of issues like animals’ diseases and low profitability caused by environmental factors. Experts anticipate the industry will have a flat growth in 2020 but the levels will be above 2011 (as per the 2019 U.S. Baseline Outlook report). The demand for meat and milk increased but there are uncertainties in the market due to trade disagreements between the US and Europe. Similar, fears have been created in Europe by Brexit delays. 

The report from global regions found growth of just 0.1 percent y-o-y (the Big 7 global regions data) where the US exports were unable to get the historical average. The US depicted a growth of just 1 percent, whereas, the production volume of EU contracted to y-o-y. The UK dairy exports that include cheese, butter and raw milk were up in 2018 to its main export destination -the EU. The milk collection in Australia depicted double-digit decline from 16% to 6%, while, New Zealand posted positive growth in January, and Brazil supplies were modest due to the rise in costs. The trend is expected to continue in the first half of the year 2019, where issues like climate change will affect the quality of produce.

Milk is a commodity-dependent upon consumption trends and on the state of the overall agricultural world. It offers, mainly, two ways of investing - futures and stock. Futures are usually high when an investor is betting on the prices of futures contracts. With some commodities, it is possible to gain indirect exposure through companies, which are a part of the production or extraction. There are only a few dairy stocks that actually engage exclusively in the production and distribution process.