News

Block cheese plummets 8 cents, more declines in store?

October 6, 2004

LOUISVILLE — Block cheese prices fell 8.75 cents to settle at $1.495 in Oct. 6 trading on the Chicago Mercantile Exchange.

The good news for pizza operators is that slight declines may follow.

For nearly 25 trading sessions, cheddar hovered near $1.56: a price well supported by vigorous buying of excess current product (cheese less than 30 days old) throughout September.

When the market finally collapsed, prices for 500-pound barrels followed quickly, dropping 15.75 cents to settle at $1.39. Historically, the 10-cent gap between barrels and blocks would indicate a potential drop in blocks. During stable trading periods, the gap ranges from 5 cents to 7 cents.

Perhaps a stronger hint at further price drops is the fall in Class III milk futures prices for the next few months. Additionally, four offers (sellers looking for buyers) were left on the board at the close of trading, indicating some possible excess product.

Read related articles in our Cheese Market Analysis Research Center by clicking here.