Monday, August 9, 2010

Milk and the stimulus.

Here is a great article on the Dean Foods conference call.

Something that is noted, is that the trend for buying milk used to be stable throughout the month. Now, it peaks in the beginning of the month, and tapers off towards the end. Based on my previous experience working in pawn shops [something that I say, at the risk of you all thinking I am a total sleaze bag ;)] we always noticed, as a rule of thumb, that people would pick up or pay on their pawn loans at the start of the month. Towards the end of the month, customers would generally be pawning items and tell us that they 'just needed a little bit of cash to get them to their check'... really, it is pretty similar to what is happening in the milk business.

I wouldn't be shocked if the strange happenings in the milk market are caused, in part, by unemployment benefits being low, people running out of money, and a lot of people getting government checks. Put another way, the government is propping up milk sales at the start of the month.

Disclosure: No position. Do your own research.

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