LYNDEN, Wis. -- Though the cost of block cheese has settled at $1.06 since July 2, dairy analyst Jerry Dryer believes market prices still may slide further.
According a report on Dairyline.com, Dryer said cheese makers may soon sell product -- if they haven't begun doing so already -- to the government, which he said, could soften prices.
Under the government's price support plan, selling cheese to Uncle Sam can cost manufacturers as much as 9 cents per pound, he added, and that's a position in which they would rather not be.
"Inventories have simply come home to roost," Dryer said, "and with milk production running ahead of year-ago levels and demand flat at best, according to the readings I'm getting, we're probably still accumulating a little into inventories."
Other than the positive impact the upcoming school year will have on demand, the weather remains the lone factor that could influence cash market prices until then. In June, temperatures in some parts of the U.S. went from mild to scorching, which, as Dryer noted, lowers milk production and degrades feed quality. Both affect cheese supplies, and their impact could start prices trending upward if the heat hangs around for the long term.