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High cheese prices may slide soon

November 14, 2004

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Dairy market analyst Jerry Dryer predicts rising cheese prices should begin to fall over the next few weeks as retailers end their annual holiday buying binge.

In his newsletter, "Dairy Market and Food Analyst," Dryer said buy-side market speculation strengthened prices through early November, but he believes that support will soon end. Ultimately prices will tumble but "they won't crash," he said. "Prices may over-correct to the downside in the next few weeks, but they'll stabilize above the five-year average through at least 1Q '05."

Dryer warns, however, that pizza operators should keep their low-price hopes in check. Milk supplies are tighter than expected, and retail (i.e. grocery stores) cheese demand could remain strong and slow a price decline.

According to the Downes-O'Neill "eDairy Insider," strong prices in the cash cheese market bumped up milk futures prices for early 2005. That could boost cheese prices for the late winter, when costs typically are at their lowest.