Inside Milk
Demand for milk cannot keep up with production
The milk production in the United States is growing faster than the demand for dairy products is recovering. "That's why 2021 could be a challenging year for American dairy farmers," said Peter Vitaliano, chief economist of the National Milk Producer Federation.
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Milk production is increasing rapidly in the United States. Economist Peter Vitaliano of the National Milk Producers Federation expects that this could create challenging conditions this year. “Although demand for dairy products is recovering somewhat among U.S. consumers, the rate of increase is still nowhere near the increase in milk supply.” It is a bleak prospect, especially in view of milk prices.
"After years of lower prices and tight margins, many dairy farmers are keen to make up for the damage this year. One of the ways is to scale up milk production and livestock." In the first month of the year, the American milk price (Class III) was $15,04 per cwt. This is approximately €29,05 per 100 kilos. In December the price was still €31,90 per 100 kilos and in In November it was even €48,22 per 100 kilos.
Outlook
Incidentally, the consumption of dairy products has generally increased in the past year, but this is now declining again. “Consumption is not as robust as it was in the early days of this crisis, when consumers were in full hoarding mode. Until schools fully reopen, demand for fluid milk and other dairy products will remain sluggish.”
Vitaliano, on the other hand, believes that dairy exports will continue to grow. “So the good news is that global markets have a strong presence,” Vitaliano said. “Our main competitors are not increasing their milk production as much as we are. As long as we keep our export prices relatively low compared to global markets, we should be able to look forward to another strong year of dairy exports.”