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An explanation for Tuesday’s CME cheese price drop

Tuesday was a down day on the dairy markets, with butter being the only product with a price increase, and that was just a penny.  The most noticeable change was in the cheese market, where Blocks closed down $.0225 at $1.9475 a pound, and barrels took a bigger fall of $.1325 to close at the same $1.9475 a pound price. 

John Umhoefer with the Wisconsin Cheese Makers Association tells Brownfield this move makes sense. “You know, the barrel price has been inverted over the block for, what is it, about two months now? It’s an unusual situation. Generally, the block is considered the value-added product so prices were in, you know, in our world upside-down with the barrels on top so it was inevitable I think that eventually, you’d see those prices realign.”

But, Umhoefer remains optimistic for farmers selling their milk. “I think you’re still going to have a chance for a couple, at least the beginnings of a recovery on the farm side because you’re going to have some good milk prices moving into the future.”

He says another reason for prices to fall is seasonal demand changes. “And we’re reaching the part of the year where Christmas sales have pushed through and you generally see the markets settle down after what is really the busiest season of the year for cheese.”