News

Cheese price plummets 19 cents

October 3, 2005

LOUISVILLE, Ky.—The price of cheddar blocks traded at the Chicago Mercantile Exchange finally took a long-awaited 19-cent nosedive to trade at $1.6050 on June 23.

The decline is the first in 22 trading sessions at the CME, and the price is the lowest since March 10.

Dairy analyst Jerry Dryer said the strong price correction didn't surprise him.

"When the market reacts, it always reacts in large bites," said Dryer, editor of Dairy & Food Market Analyst newsletter.

Based on the record volume of cheese traded in the last month at the CME, and what Dryer's sources around the U.S. have told him about high inventories, he believes prices will "fall some more."

Still, he said hot summer weather and the holiday buying season will, per usual, pressure milk supplies soon enough and keep prices largely in check.

"So get in on the party early, because it'll turn around and go back up soon enough," Dryer advised buyers. He also said buyers would be wise to consider hedging strategies for the rest of the year. "This also is the time to look at buying milk futures. Contracts for the fall are trading at a huge discount right now. ... Buying low-priced milk will help offset the cost of that high-priced cheese later in the year."