Cheese Market Churned Up as Midwest Cows Overwhelm U.S. Demandby
Spot prices fall to lowest in almost 5 years in Chicago
U.S. inventories were up 15% in October from a year earlier
Cheese prices on the Chicago Mercantile Exchange dropped to their lowest in almost five years on Wednesday. The reason: Midwest dairy cows are producing such prodigious quantities of milk this year that even the usual seasonal uptick in demand isn’t enough to prevent a glut.
Cheddar-cheese blocks fell 1.9 percent to settle at $1.41 a pound, the lowest closing price since Jan. 10, 2011. Cheese futures for December delivery fell to an eight-month low on the CME.
Cheese inventories usually rise in the first half of the year, a time when most milk in the U.S. is produced, and are then drawn down in the second half as Americans consume more with the onset of football season (think pizza) and the holidays.
This year, however, supplies in the Midwest, where milk mainly goes into cheese-making, have overwhelmed consumption. In Wisconsin and in Michigan, milk production jumped 4.5 percent in October from a year earlier, according to U.S. Department of Agriculture data. Cheese inventories in October were 15 percent higher, the numbers also show.
“We’re nearing the end of the holiday demand season, so with that coming to a close and with where stocks are at, it’s not looking well for cheese,” said Curtis Bosma, an account manager at Chicago-based HighGround Dairy. “We’re making a lot of cheese and not selling a lot of it, so it’s all going into storage for the moment.”