May milk production drops cheese prices again

 
June 18, 2002

LYNDEN, Wis. -- According to the USDA's most recent milk numbers, production ran 3.2 percent higher than last year, which virtually ensures cheese prices will remain low for some time to come.

The proof of the ongoing bearish market was reflected in the June 18 Chicago Mercantile Exchange price for 40-pound blocks: $1.12 per pound, which is two cents below the U.S. Government price support level.

According to Dairlyline.com, market analyst Jerry Dryer said low prices make some dairy insiders concerned that "product might start moving to the government."

But for the near term, Dryer said, such concern is unwarranted. Not only is the process of selling cheese to the government long, difficult and much-loathed by cheese producers, historically, prices have to remain below support levels for several weeks before Uncle Sam opens his wallet.

But never overlook the weather's role in market pricing, said Dryer. The summer's heat will stress dairy cows and reduce their output. That will tighten supplies and ultimately trigger a price rebound as heavy fall demand kicks in.


Topics: Cheese


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