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US winter storm drives up milk prices at CME
While milk prices in the EU remain depressed due to high supply and weak demand, (futures) prices in the United States are rising again. It may be a temporary trend, but the futures market for Class 3 and 4 milk in Chicago has received a significant boost from Winter Storm Fern, which is raging through Texas and the Midwest.
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Several farmers in the affected region either didn't have their milk collected at all or had it collected with significant delays. Many dairy farmers were also told to simply let the milk go. There was no other option.
Consumers, for their part, also panicked somewhat and quickly began hoarding groceries. They were worried that their supermarkets wouldn't be restocked as quickly due to the bad weather, leaving them without fresh food. Although supermarkets tried to allay these concerns, it didn't entirely help.
Futures trading on the CME in Chicago was also uneasy, given the sharp rise in futures market prices for class 3 and 4 milk (the most common grades) last week.
The coming period will reveal how severe and long the winter weather will be in the US. Initial indications, however, point to significant disruptions to supply. Low temperatures generally also have a depressing effect on milk production per cow.