CHICAGO—Reports of exceptionally tight milk supplies have sent the block cheese market soaring nearly 9 cents per pound over the last three trading days.
The price of 40-pound blocks sold at the Chicago Mercantile Exchange hit $1.46 on Feb. 19, the highest price since Nov. 3, 2003, when the price was $1.48.
Through the last part of January and early February, the block market inched northward at the rate of about a half cent a day, but after rising 2 cents to $1.37 on Feb. 13, it jumped more than 3 cents on Feb. 18 and 5 cents more on Feb. 19.
According to a Dairyline.com report, market analyst Jerry Dryer said lower-than-usual milk supplies have left cheese makers paying higher prices, particularly in the Upper Midwest. As a consequence, cheese orders are backing up. The result, Dryer said, is that cheese suppliers are holding on to their products in hopes of selling later when prices move higher.
"Sooner or later they're going to get too high," Dryer warned. "But right now they're looking quite good" for cheese makers.
Dryer said retail sales are going well, and that foodservice sales are picking up steam. Kraft also recently announced it will spend $500 million to 600 million to promote cheese sales.
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