Anyone familiar with winter storms or hurricanes can relate to scary weather forecasts and runs to the grocery stores for milk, bread, eggs, and the like. Given the spread of COVID-19 concerns, school closures, and business shutdowns, a trip to the grocery shop now may reveal many bare shelves, not least in the dairy aisle.

The fluid dairy industry is amid upheaval not seen in decades as school close and demand for individual milk servings for lunch has all but disappeared. In its place, demand for gallons and half gallons for at-home consumption has ramped up as families shelter in place and begin homeschooling.

Essentially, the collapse of school lunch demand has created a glut of fluid milk even as producers’ daily production surges ahead of spring.

Eventually, some of this milk reaching bottling plants will find its way into larger format for home consumption, but rebalancing the supply chain will take time.

In turn, this creates an opportunity for industrial buyers to extend cover and lock in prices.

Nonfat dried milk futures

Source: DTN
Posted by: Information Services
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