So where-to-from-here for the dairy industry? The final week of December made for some very nervous days on the Chicago Mercantile Exchange. For weeks we saw the barrel-to-block spread get has high as 27 cents. Then, in just five sessions, blocks came sliding down to a two-cent gap. Ken Heiman is a cheese maker in Wisconsin, he says one private company was holding the block price up to protect themselves through a certain date, once they achieved their objective, they let the market go.
Heiman says the “Spooky part” now is he doesn’t know if anything will stop the market from dropping further. The fact is the amount of cheese in cold storage continues to edge higher “And anytime it breaks the 900-million pounds it seems all hell breaks loose!” As of the end of November, that number was more than 921 million pounds. Heiman doesn’t think the domestic market is going to recover enough to pull that inventory down, he believes it is going to take a rebound in the export market to really turn this market around.
In the meantime, Heiman says dairy producers are buying some type of protection to at least limit their losses through the first half of 2010. “Am I saying he’s going to make money, no. But I am saying at least he will stay afloat!”
Ken Heiman and his family own and operate Nasonville Dairy, a central Wisconsin cheese factory which handles about 2 million pounds of milk per day. He also has Weber’s Farm, a dairy farm which pasteurizes and sells milk on the farm. He is past president of the Wisconsin Cheesemakers Association and currently serves on the Wisconsin Milk Marketing Board. Hear his comments here:Heiman
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