Milk Outduels Gold as 2011's Most Profitable Commodity

For all the drum beating about gold prices this year, the year's big winner in the commodity world's version of a gold rush was milk futures. Milk! In case you're wondering, milk futures rose forty percent, according to Bloomberg News reporter Courtney Donohoe's well done TV segment. She weaves export trends, global gender demographics, animal feed costs, and other factors into a cogent, crisp market overview. One conclusion from Donohoe's report is that milk prices are very likely to increase in the coming year.

Photo from Northwest Sustainable Dairies,
a partnership program in Oregon and Washington.

Along those lines, an article in today's New York Times noted how domestic demand for organic milk was outstripping supply. There are regional nuances to the story, and does mention that farmers are only seeing a fraction of any price increase. Since supermarkets often operate on narrow unit profit margins (they characteristically make their money on volume), where does the money go? I'm guessing, but distributors and wholesalers would be in position to cash in on milk's unending popularity.

The Times piece focused on milk in its most traditionally associated forms, such as the proverbial glass of milk. However, the Bloomberg News segment provided stronger details, including the use of dried milk in  other beverages, as drivers in the market price for milk futures.

Why would one care about any of this? Well, we still live in a world in which the message of "no inflation" or "low inflation" is disseminated on a daily basis. This insulting fiction, delivered via US government agencies and on-message Wall Street analysts, is consistently belied by simple fact. (Notably, in Donohoe's story, she did not directly quote any analyst or trader.) Meanwhile, everyday purchases, such as a quart of milk, are getting increasingly expensive, while wages are either stagnant or declining in the United States. These trends combine to create disbelief in institutions and anxiety about personal propsperity, a volatile mix that may be reflected in increased domestic social and political turmoil in 2012.