Dairy products are important sources of vitamins (such as vitamin D, vitamin A) and minerals such as calcium, magnesium, zinc and protein in our diets which are necessary for skeletal growth. The dairy industry involves the collection and processing of animal milk – mostly from cows and goats – for human consumption. Milk alone is one of the most produced and valuable agricultural commodities worldwide.
Redstone Commodity Search have a strong network within the dairy sector and our soft commodities team has a strong understanding of the dairy industry (see our up to date vacancies). We have supported global Trading Houses, Majors, Brokerages and Merchants with assignments across the globe in Africa, Asia, Europe, Middle East and in the USA.
Recently, our soft commodities team has assisted clients with the following positions:
- French-Speaking Dairy Trader, Netherlands
- Dairy Trader (milk, powder, fats), Singapore
- Dairy Purchasing Manager, Netherlands
- Dairy Risk Analyst, USA
- Dairy Sales Manager, Ivory Coast
While a valuable, nutritious commodity, milk is highly perishable and consequently has a short shelf life. Milk processing allows the preservation of milk for a much longer period and the reduction of bacteria likely to cause illness. Two preservation processes are cooling and pasteurisation.
- Cooling – Milk is cooled to preferably 4°C immediately after milking through mechanical refrigeration or cooling tanks. Milk is then transported away in milk cans or insulated bulk tankers.
- Pasteurisation – Milk is pumped into the vat and heated to a specified temperature for a specified time and then cooled. The cooled milk is pumped to the rest of the processing line to, for example, the bottling station or cheese vat. Milk will be heated to and held at different temperatures at for different lengths of time depending on the intended use for the milk following treatment (more information).
The fat content of milk varies and is largely dependent on the food the cows eat. It can be classified as full, semi-skimmed and skimmed milk, semi-skimmed being the most popular. Milk can also be processed further to convert it into high value, concentrated and easily transportable products with longer shelf lives. These processed products include, but are not limited to:
- Butter and ghee, margarine
- Butter Oil
- Condensed Milk
- Evaporated Milk
- Fermented milk such as yoghurt, labneh, tarag etc.
- Milk Powder
- Whey Powders
How is Milk traded?
The per capita consumption of milk and dairy products is higher in developed countries but the there is a growing demand in developing countries with increasing urbanisation and changes in diet.
There are few countries which are self-sufficient with regards to milk. Countries with surplus to export include Argentina, Australia, New Zealand, the USA, Uruguay and some countries in the EU and Eastern Europe. Top countries to import milk include Algeria, China, Japan, Mexico, the Philippines and Russia. Whole milk powder (WMP) and skimmed milk powder (SMP) are the most traded agricultural commodities globally. The dairy trade is dominated by milk powders, butter, anhydrous milk fat (AMF) and cheese.
The dairy industry can be unpredictable and volatile so to manage price risk farmers, producers and manufacturers trade in futures and options. Among the most popular derivative products are Whole Milk Powder (WMP) Skim Milk Powder (SMP) and Anhydrous Milk Fat (AMF) futures contracts, WMP options contracts and, more recently, Butter (BTR) futures contracts.
Who are the Customers?
- Animal feed industry
- Dairy plants
- Domestic consumers buying directly from the farmer
- Food and confectionary manufacturers
- Ice cream industry
- Trading houses