Dairy futures are set to surge higher after US dairy stocks soared earlier this week.
The US Department of Agriculture’s futures price for milk products surged from $26.80 a gallon to $31.25.
“The price of milk is going up, it’s going to be higher than that and it will continue to rise,” dairy futures strategist Brian Williams told The Wall Street Journal.
“I would say that’s a pretty big jump.”
The price of the most expensive commodity in dairy futures has risen more than 40 per cent over the past year, as the global economy has become more reliant on milk as a source of protein.
The price for the cheapest commodity, butter, has also risen.
Dairy futures, which are traded in the US on the US futures exchange, have risen more dramatically than other commodities such as energy and wheat in recent months, as consumers have increasingly turned to other options to feed their families.
The US Department on Wednesday said that dairy futures had recovered from the last session of trading, which ended at $30.95 a gallon on Thursday, and were expected to increase to $33.30 by the end of October.
“The price on the futures market has now returned to a level that was reached prior to the September 19 session,” the department said in a statement.
“As a result, the US milk futures are poised to return to their prior levels.”
Dairy futures are traded on the Futures Market, a US exchange controlled by the US Department at the US dollar.
The futures are calculated in relation to the price of a basket of commodity futures, and are not an actual market price.
However, a basket is one commodity which is priced at the same price across several different futures exchanges.
A basket of futures markets which include the US has a similar name to the basket of commodities futures which includes the commodity futures market in which dairy futures are listed.
US dairy futures rose more than 10 per cent on Wednesday after the futures price was boosted on Wednesday by the Federal Reserve’s decision to begin raising interest rates by a quarter-point.
The dollar jumped to $1.2795 from $1,2724.
A dollar is a unit of currency.
The current US dollar index is up 2.3 per cent since June 23.
On Tuesday, US dairy futures were trading at a US$30 a gallon level, the highest since April 30.
Dairies in the United States have been on a steep decline over the last few years, as they have been forced to import a lot of milk to feed families.