U.S. cheddar-cheese prices plunged the most since December 2008 as grocers slowed purchases after stockpiling most of what they will need for the year-end holidays.
The 40-pound blocks of cheddar traded on the Chicago Mercantile Exchange plunged 7.7 percent to $1.8325 a pound after touching a three-month high of $2 on Nov. 15. Prices still are up 27 percent from a year ago. Retail costs rose to a record $5.707 a pound in September, up 21 percent from a year earlier, Bureau of Labor Statistics data show.
“Buyers purchased all the product they needed ahead of the upcoming holiday season and will wait for lower prices,” Bill Brooks, a dairy economist for INTL FCStone Inc. in Kansas City, said in a telephone interview. “Demand dried up with $2 cheese prices.”
U.S. milk production probably climbed 1.8 percent in October from a year earlier as rising prices encouraged dairy farmers to increase herds and boost per-cow output, Brooks said. The U.S. Department of Agriculture is scheduled to release its October output forecast at 3 p.m. today in Washington.
Class III milk futures on the CME reached a four-year high of $21.75 per 100 pounds on Aug. 11 as U.S. dairy-product demand rose and exports of butter, cheese and powdered milk increased. Milk for December delivery rose 0.1 percent to $18.25 as of 12:37 p.m. in Chicago, after reaching an 11-week high at $19.78 on Nov. 15. The commodity has climbed 38 percent in this year.
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