News

UPDATED Blocks down, but expect volatile cheese prices in '05

January 31, 2005

* Block prices slid 7.25 cents to $1.64 per pound in Feb. 1 trading on the Chicago Mercantile Exchange, ending an eight-day stay above the $1.70 mark. One year ago today, blocks traded at $1.32 per pound.

If you were wishing cheese prices would fall this year, keep on wishing, say dairy analysts.

Historically, when prices are high one year, the opposite plays out in the next.

That doesn't appear to be the scenario setting up for 2005.

Dairy analyst Alan Levitt, who edits the Chicago Mercantile Exchange's Daily Dairy Report, said tight but balanced supplies should keep prices volatile throughout the year.

Record January prices, he added, are a pretty strong indicator of things to come.

"We're going to have really high prices this year," Levitt told DairyLine.com, citing high dairy cow slaughter numbers as a key factor in price increases. With price peaks so early in the year -- when blocks typically trade at around $1.30 -- new peaks are a real possibility.

"(I)f we thought last year was nuts, I think this year could be even crazier," Levitt said.

The MCT Compass newsletter, published by MCT Dairies, is predicting block price averages of $1.65 for February, $1.60 for March and $1.58 for April — and its numbers are typically conservative.

Read more in our Cheese Market Analysis Research Center.