LOUISVILLE, Ky. — Despite the toll taken on the country's milk supply by an ongoing hot-and-dry spell, the price of block cheese continues to melt down.
During July 29 trading on the Chicago Mercantile Exchange, block prices fell nearly 6 cents to close at $1.39, their lowest point since Oct. 11, 2004. Seven offers remained on the board, signaling possible further declines.
One year ago, blocks fetched $1.53 per pound.
For some time now, dairy analysts have reported that moo juice delivered to processors in recent weeks was lower in fat and solids content than cheese makers prefer. A source quoted in "Dairy & Food Market Analyst" newsletter put it this way: "Water in, water out. Cows don't eat much (when it's hot), they just drink water."
However, the slowness of last week's trading pace appears to signal end-users supplies are in good shape, and dairy cow numbers on the milk line are above year-ago levels.
Market watchers have predicted all year long, however, that cheese prices would be highly volatile, and thus far, they've been correct. School orders for dairy products are weeks away from kicking in, and if history repeats itself, prices should respond with some northward movement.
Read related stories in our Cheese Market Research Center.