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LYNDEN, Wash. -- Heavy cheese inventories will likely push block cheddar prices downward, said analyst Jerry Dryer.
According to a report on Dairyline.com, Dryer, the editor of Dairy & Food Market Analyst, said high inventories and low costs of barrel cheese (500-pound units of cheddar selling currently at $1.06 per pound on the Chicago Mercantile Exchange [CME]) could force an increase in the production of 40-pound blocks, which are selling at $1.17.
Dryer said the shift could drive the block price toward the government support price of $1.13 per pound.
"We have a glut of cheese here that we have to clear out," he told Dairyline on Jan. 29. "And it's not going to happen when prices are well above the support level, so we're going to keep crawling up and easing back down or falling back down to that support level until we clear some of this product."
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