Excess butter supply may lower cheese prices

Aug. 18, 2003

WASHINGTON, D.C. -- The USDA's latest "Livestock, Dairy & Poultry Outlook" reports that cheese prices may fall due to excess inventories throughout the U.S of other dairy products.

According to Dairyline.com, despite modest increases in cheese demand combined with slight decreases in cheese inventories, the report warned that heavy supplies of butter and milk powder will likely remain a "major threat" to cheese prices, since the overall demand for milk could decline.

The USDA report said recent production data signals a small cheese production recovery underway and that some "market tightness" could result in the coming months. However it added "that expected ample supplies of butter and nonfat dry milk may re-emerge as major factors in cheese prices, once cheese pipelines are rebuilt."

The report also mentioned that cheese buyers have become more aggressive lately in seeking current cheese supplies and future commitments. However, the researchers weren't certain whether that activity was a sign buyers were scrambling to scoop up shrinking supplies or whether they were concerned prices would rise again.

During trading in the third week of August, block cheese prices remained at $1.60 per pound for the second straight week. According to Dairyline.com, that price is 47 cents higher than in the comparable period in 2002.

Topics: Cheese

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