Food purchases support US dairy market

The program is called: 'Farmers to Families Food Box program' and is intended for farmers and citizens. In recent months, approximately $4 billion worth of products have already been purchased. The food supplies such as meat, fish and dairy, which are purchased by the government, would initially be intended for the catering industry, which is purchasing less volume due to the corona crisis. For the government, it cuts both ways: on the one hand, the program offers support to citizens who cannot make ends meet, and on the other hand, it supports the agricultural markets.

Chicago futures up
Milk price futures in Chicago (class 3, intended for cheese production) rose by almost 5% on Tuesday. The January contract therefore amounted to approximately $16,85 per CWT (=50,2 kilos). Dairy products such as cheese and milk powder are also increasing due to the announced extension of the program.

Milk production higher again in 2021
The American dairy market could use a boost. Although the dairy exports In 2020, partly thanks to a weakened dollar, domestic consumption is disappointing due to the corona measures. The extension of the purchase program therefore offers relief. At the same time, milk supply increases. The US Department of Agriculture (USDA) expects a growth of 1,6% to 102 million tons in the latest forecast for this year. This continues the continuous rise of the milk lake, which has been going on since 2009.

New president
Although buying up food supports the dairy market, it also brings uncertainties. The program was initiated by the government of President Donald Trump, but he is resigning in the middle of this month. The question is whether his successor Joe Biden will continue with the support package. That would not be completely illogical, because the American government has been buying dairy and meat for food banks for years. In view of the growing milk supply, an extension of the program would be desirable.