Sunday, June 03, 2007

Will milk become America's new oil?

I blogged last week what the impact of planting biofuel crops is having on the beer market in Germany, as well as on the tortilla market in Mexico. Now milk in the US?

Farmers are ripping out crops of barley, soybeans, and the like to plant more corn for ethanol. This is going to get interesting.

Hat tip to JICWylie.
clipped from www.oregonlive.com
Dairy market forecasters are warning that consumers can
expect a sharp increase in dairy prices this summer. By
June, the milk futures market predicts, the price paid to
farmers will have increased 50 percent this year -- driven
by higher costs of transporting milk to market and increased
demand for corn to produce ethanol.
But University of Illinois dairy specialist Michael Hutjens
forecasts further increases of up to 40 cents a gallon for
milk over the next few months, and up to 60 cents for a
pound of cheese.
Hutjens and others said higher fuel prices have increased
the cost of moving milk from farm to market, and corn -- the
primary feed for dairy cattle -- is being gobbled up by
producers of ethanol. The USDA projects that 3.2 billion
bushels of this year's corn crop will be used to make
ethanol, a 52 percent increase over 2006.
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