Analyst says falling milk futures are keeping cheese prices low

Jan. 14, 2003

LYNDEN, Wash. -- Cheese prices fell again last week amid declining prices for Class milk III futures contracts.

The per-pound trading price of 40-blocks of cheddar on the Chicago Mercantile Exchange sank to $1.11 on Jan. 8, before climbing slightly to $1.15 on Jan. 14.

According to, the average Class III contract for the first six months of 2003 plunged 52 cents in trading over the last two weeks.

Analyst Jerry Dryer reported that Class III futures at the close of Jan. 10 trading averaged $10.61 per cwt. for the first six months of 2003, and $12.57 for the last six months.

Dryer said several factors have kept milk prices low, including mild weather (which boosts milk production) and school holiday schedule changes, which affected Class I demand by pushing more milk into manufacturing. And with the passage of holiday retail sales, the flow of orders to dairy production plants has slowed dramatically.

Overall, Dryer said "the psychology of the market" is keeping downward pressure on milk. Declining prices have both manufacturers and milk producers trying to sell before prices move further down, he said.

"Sellers simply outnumber buyers right now, so prices are going to move lower at least for the short term," said Dryer, editor of the Dairy & Food Market Analyst newsletter. "The cycle just keeps repeating itself."

Topics: Cheese

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