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QUESTION: Last issue you said protein prices are going way up and you were right! Are protein powder prices going to continue to rise or are they coming down?
ANSWER: No! Not during first quarter of 2011 for sure. There was a slight drop in price at the end of 2010 which many people thought was a softening in the market.. But the truth is the market hasn’t softened at all. Many dairy traders and companies that had some inventory wanted to close their year off strong with no inventory due to the fact that historically when dairy markets have gotten this high they have fell VERY VERY fast and people have lost a lot of money. Being that history tends to repeat itself most companies cleaned out old inventory and are running lean in order to stay on the safe side. So far in 2011 the prices have stayed stable and supply has still not loosened up much if any at all. I wouldn’t expect to see a decline in protein prices until the 2nd half of the year if at all this year. There is just too much global demand with too few new plants coming on board making high end dairy proteins.
Why Protein Prices Are Not Going Down
- Dairy Proteins are globally in short supply as demand increases in Asia and India.
- International prices for Whey Protein Isolate and Whey Protein Concentrate are higher than the U.S. and rising resulting in more domestic product being exported.
- U.S. beef supplies are at the lowest levels in 50 years. No cow’s to milk, no milk to make cheese with a final result of no Whey to be filtered and dried.
- New Zealand continues to experience drought conditions and lower dairy output and Australia is recovering from massive floods.
- Fonterra is the world's leading exporter of dairy products and responsible for more than a third of international dairy trade. They're now moving more dairy ingredients to China and less to the U.S.
- Low milk pricing and high grain pricing. Since corn is at a record high this year, farmers are better off selling their corn and cows then they are in feeding the corn to their cows, milking them and selling their milk.