The government hasn’t been buying much lowfat milk powder these days. That’s because milk prices have remained above support levels, so it hasn’t had to make purchases to boost farm income.

In fact, government coffers of surplus lowfat milk powder are beginning to run low. The current level is just under 200 million pounds. And analysts predict that the supply will run out by Sept. 30 — the end of the federal fiscal year.

That’s a marked change from the billion-pound lowfat milk powder surplus recorded two years ago — when storage cost alone peaked at $2.3 million a month.

However, economists note that the situation could turn around quickly, especially if milk prices take a tumble as anticipated. Some suggest that there is a significant chance the government will have to buy milk powder this fall and winter due to milk prices being ratcheted downward.

Associated Press