The price of a 40-pound block of cheddar cheese dropped to $1.17 on the Chicago Mercantile Exchange on Feb. 22, the lowest price since Oct. 24, when the market took a month-long nosedive following the release of a 31-million-pound correction to the National Agricultural Statistics Service's August '01 Cold Storage Report.
Before this most recent price drop of 3.75 percent, the block cheese cost hasn't seen such depths since Feb. 13 '01. Over the rest of last year, the cheese market crept upward about a dime a month, until peaking at $1.78 on Aug. 10, and holding in the $1.70s for almost eight weeks.
Preliminary data gathered by the USDA points toward high milk production as the cause of the recent price drops. January milk production was up 1.8 percent over last year, despite a slight reduction in the number of dairy cows. December '01 milk production also was up 1.2 percent over Dec. '00.
Market analyst Jerry Dryer, editor of Dairy & Food Market Analyst said this winter's mild weather has spurred milk output and held cheese prices down.
"Mother Nature's finger prints are all over that increase," Dryer told Dairy.com. Production "gains are being amplified by the fact that winter weather simply hasn't materialized."
Is this the bottom yet? Dryer told PizzaMarketplace that it's anyone's guess at this point.
"You'd think we'd be near the bottom, but we can only really wait and see," Dryer said. "Everything that's gone on over the past several months has definitely been a little unusual."
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