Draught cow culling leads to increase in milk prices

The US department of Agriculture has estimated that the American milk output for 2013 will drop around 0.5 percent to 198.9bn pounds as the number of milk producing cows drops to an eight year low.

Corn crops, an essential component of cattle feed, have soared to record high prices in August after a summer of draught and pestilence afflicted the US and destroyed much of the harvest. According to the UN, global dairy prices rose 6.9 percent last month alone.

The supply of feed is likely to remain low for the next 12 months, slowing the output in the US and Europe considerably. American cows produced an average of 1,776 pounds of milk each in August, a year-on-year decline of 0.5 percent. The results are the first negative figures in 13 months and the single biggest year-on-year decline since February 2004.

Because of the rising feed prices and the drop in productivity, 2.04 million dairy cows have been slaughtered since the beginning of the year, the biggest cull since 1986, according to US government figures. The same report shows that the number of dairy cows in the US will shrink by 1.1 percent in 2013, the smallest herd since 2005.

Milk futures have been on an upwards drive since mid-April, having gone up around 45 percent, and experts believe that  they may yet rise another 19 percent by the start of the next harvest in June 2013.