Prices for block cheddar plummeted 20 cents on the Chicago Mercantile Exchange to trade at $1.80 on May 21.
Throughout mid-May, market signals have warned of an imminent drop. The May 20 release of the USDA's Cold Storage Report released showed cheese stocks inching up slightly, and an unusually large gap between prices for 40-pound blocks and 500-pound barrels has pressured prices for several days. Commonly the gap is a nickel, but from May 17-20, barrels were 17 cents cheaper, and analysts predicted blocks would fall to narrow the difference.
Only part of that scenario developed, however, when in May 21 trading, barrels followed blocks downward 22 cents to close at $1.61. In the process, the price gap widened from 17 cents to 19 cents.
Could the ongoing imbalance signal even more cheese price declines ahead?
The question got a flat, "Yes," from Jerry Dryer, editor of Dairy & Food Market Analyst newsletter. "I don't know how much or how soon, but prices will fall some more."
Reinforcing Dryer's prediction was the day's 74-cent decline in milk futures prices. The drop was just a penny shy of the maximum allowable single-day decrease.