MADISON, Wis.—What goes up, must come down, and Ed Jesse, an agricultural economist at the University of Wisconsin-Madison, said cheese prices are no exception to that rule.
In an Agri-View.com report, Jesse said current dairy market fundamentals don't justify record-high cheese prices. A "fairly heavy crash," he said, is more likely than a gradual price slide.
Why this may occur, Jesse said, is because cheese stocks worldwide are higher than many believe. High block prices on the Chicago Mercantile Exchange, he said, likely will spur cheese imports and generate some block trading. (Though multiple parties have bid for blocks during March, no block trades have been made at the CME since March 9.)
Dairy analyst Jerry Dryer doesn't agree with Jesse's view that ample cheese supplies abound. According to a report on Dairyline.com, Dryer, editor of Dairy & Food Market Analyst, said cheese manufacturers tell him low milk supplies have put cheese rationing "in full bloom."
Dryer agreed that some manufacturers have cheese stashed away but, "not enough to satisfy current requirements and none to spare for the future." Cheese stocks that might have been reserved for aging are now headed to the sale block, and that could tighten future supplies.
Read related articles in our Cheese Market Analysis Research Center.