Low cheese prices should hold through mid-summer

May 23, 2002

The combination of high cheese supplies and strong dairy production should hold 40-pound block prices near or below $1.20 per pound through at least mid-summer, according to two dairy analysts.

The National Agricultural Statistics Service's (NASS) April Cold Storage Report showed American-type cheese inventories up 2 percent from March and 1 percent above the same period in 2001. Total cheese was up 3 percent from March and 6 percent above a year ago.

According to Jerry Dryer, editor of Dairy & Food Market Analyst, cool weather has kept milk production high. Recent passage of the farm bill, which provides government-sponsored price incentives most friendly to small dairy producers, will keep more dairymen in the business and keep milk supplies high.

Dairy industry analyst Alan Levitt said such high cheese inventory numbers are in line with expectations for April, but added that "weak demand is a long-term concern."

A report on Dairyline.com echoed Levitt's claim of poor cheese sales, much of which Dryer attributes to a lack of promotion by dairy associations, cheese retailers and the foodservice community.

"There's just a lack of exciting new products being put in front of people," Dryer said. "The foodservice guys ought to be out there promoting their butts off."

Dryer advised that pizzeria operators do everything they can to boost sales while cheese prices are low.

"The pizza guys ought to be selling pizzas like maniacs," he said. "They're going to see very reasonable prices for the foreseeable future, and they could go to the futures market and lock in good prices for many months to come."

Levitt predicts block cheese will continue to trade in the range of $1.17 to $1.23 another three to five weeks, but added, "I expect things to start tightening up by Independence Day, if not sooner. Historically, cheese prices start turning higher in the third week of May. So every week it holds from here on out is borrowed time."

Topics: Cheese

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