US Government looking to buy 21,000 tonnes of cheese

The announcement, posted on the US Government website last week, prompted dairy analysts to say that it could be a ‘game changer for dairy demand and milk prices’.

Last year, the US Government purchased 2m pounds of cheese for food banks, local food purchase assistance and schools, but this year is aiming to buy more than 20 times that.

Mike North, of Ever.Ag – a farm advisory company – said last year's purchase was a big demand driver for cheese and this year’s plans could have an even bigger boost to demand and milk prices for American dairy farmers.

He said: “When you break it all down, they're looking for 47m pounds of cheese – that's 1900 truckloads of cheese to be delivered somewhere in that neighbourhood, we believe, from about October out through next June.

“So, if we go through the bidding process stage by stage and can fully realise that amount of cheese being sold to the government, that's a little bit of a game changer.”

The US dairy demand could rise as the US Government buys significant volumes of cheese

The cheese buying process happens in multiple stages, which was described as 'complicated and convoluted'. However, if the proposed volume is bought, then dairy producers could ultimately see it support milk prices.

“It starts to put some value back into those fall months, first on cheese and then the class three complex secondarily as it creates competition back into that class for the market as well,” says Mr North. “So, it is a potential game changer if it's realized, but also know that the bidding process has multiple stages.

"And they've unveiled what the opportunity could be. But now we have to see which sellers are willing to participate and how much they're willing to allocate.”