Most Popular White Papers
Content provided in partnership with
Food & Beverage Industry
Industry: Email Alert RSS FeedDry buttermilk and nonfat dry milk price relationship - U.S. Dept. of Agriculture. Economic Research Service report
Situation and Outlook Report: Dairy, August, 1991
Dry buttermilk is a close, but not exact, substitute for nonfat dry milk. Prices of dry buttermilk are sensitive to nonfat dry milk prices. In fact, buttermilk prices may reflect changes in the nonfat dry milk market faster than nonfat dry milk prices themselves. However, different characteristics of the two products lead to some differences in seasonal price patterns.
Buttermilk is the liquid remaining from the cream after the butter has been removed from the churn. (This buttermilk should not be confused with the fluid buttermilk sold to consumers, a cultured lowfat milk that resembles buttermilk.) When dried, buttermilk has a distinctive flavor and slightly more fat (about 5 percent instead of about 1 percent) than nonfat dry milk. The flavor of buttermilk is desired in certain bakery products and mixes, but limits its use in many other products. Ice cream makers have traditionally used substantial quantities of buttermilk solids because they were an inexpensive source of slight amounts of milkfat. This advantage now is less because of the lower price of milkfat relative to solids-not-fat.
During periods of heavy milk surplus, output of butter, nonfat dry milk, and dry buttermilk all reach high levels. Surplus butter and nonfat dry milk can be sold to the Commodity Credit Corporation (CCC), but excess buttermilk solids must be cleared through the commercial market. Buttermilk prices must be low enough to encourage additional use by customers who would prefer to use nonfat dry milk. During most of 1983, for example, dry buttermilk prices ran between 78 and 81 percent of nonfat dry milk prices (Central States production area).
During more normal conditions, relative prices are strongly affected by two seasonal forces: seasonality of ice cream production and use of nonfat dry milk during the tight season to produce cheese and cultured products. These patterns were apparent in relative prices during 1988-90, when dry buttermilk prices ranged from 72 to 103 percent of nonfat dry milk prices. The highest relative buttermilk prices generally occurred during June-August, when demand for ice cream ingredients was seasonally high and butter output was seasonally low.
Relative buttermilk prices tended to be low during the autumn. Autumn demand for nonfat dry milk to supplement or replace fresh skim milk lifted nonfat dry milk prices, but had much less effect on dry buttermilk prices.
Dry buttermilk prices often serve as a harbinger of change in the larger nonfat dry milk market, although these indications may be partially hidden by seasonal conditions. For example, buttermilk prices in 1988 reacted more quickly than nonfat dry milk prices to market tightening. Similarly, the much sharper rises in nonfat dry milk prices than buttermilk prices during March-May 1990 indicated that conditions might not be as tight as implied by nonfat dry milk prices. However, low relative prices late in the year can be ambiguous. The low relative prices during October-November 1989 resulted from general tightness that could not be significantly alleviated by near-complete substitution where possible of dry buttermilk for nonfat dry milk.
COPYRIGHT 1991 U.S. Department of Agriculture
COPYRIGHT 2004 Gale Group
Find Research Guides for:
Find Featured Titles for: Autos
Most Popular Articles in Business
- Research and Markets : Tesco Plc - SWOT Framework Analysis
- Do Us a Flavor - Ben & Jerry's Issues a Call for Euphoric New Flavors
- eBay made easy: ready to start an eBay business? These 5 simple steps will ...
- Katrina's lawsuit surge: a legal battle to force insurers to pay for flood ...
- Wal-Mart's newest distribution center opened last month near the southwest ...
- More »