Find out why cheese prices are leveling off. See the main reasons behind this trend and what it means for the market. Want more details? Keep reading.
Two major factors have been influencing the recent stabilization of cheese prices after a significant rally. CME spot cheese prices surged from mid-March and peaked in mid-May but have since returned to sustainable levels. According to the esteemed analyst, Betty Berning, with her deep understanding of the market dynamics, this correction will likely hold through the summer, with a seasonal increase expected in the fall.
| Category | March 2024 | May 2024 | Change |
|---|---|---|---|
| CME Block Cheese Prices | $1.3925/lb | $1.98/lb | +60¢/lb |
| CME Barrel Cheese Prices | $1.3125/lb | $2.125/lb | +80¢/lb |
| U.S. Cheese Exports | 121.3 million lbs | – | Record High |
| Year-to-Date Cheese Production | – | 3.53 billion lbs | -1% compared to 2023 |
“The recent price run-up can be attributed to strong export demand,” Berning explained. “In early 2024, U.S. cheese prices were significantly lower than those in Oceania and Europe, prompting international buyers to purchase substantial quantities of U.S. cheese.”
In March, U.S. cheese exports hit an unprecedented record of 121.3 million pounds, with fresh and grated cheeses, particularly mozzarella, seeing strong demand. After hitting a low of $1.3925 per pound in mid-March, CME block cheese prices rose to $1.98 per pound by May 17, while barrel prices increased to $2.125 per pound.
Cheese production also declined due to tighter milk supplies, with 3.53 billion pounds produced year to date, down 1% from the same period in 2023. This decline has helped prevent inventory build-ups.
- Export demand: As prices rose, export demand diminished. Berning noted that U.S. prices are now similar to those in Oceania and the EU, excluding freight costs. With shipping costs factored in, U.S. products become less competitive, reducing exports.
- Inventory management: Reduced production has prevented significant inventory increases. Limited milk supplies due to fewer U.S. milk cows and heifer replacements add to the complex supply situation, potentially supporting prices in the short term.
Key Takeaways:
- Cheese prices witnessed a significant increase from mid-March to mid-May 2024, driven by robust export demand.
- U.S. cheese exports reached a record high of 121.3 million pounds in March, especially for fresh and grated cheese like mozzarella.
- Production decreased by 1% year-to-date, compared to the same period in 2023, due to tighter milk supplies.
- Cheese prices have cooled since mid-May, with barrel prices dropping 18.5 cents and blocks falling 17 cents by May 31.
- Future price trends may depend on factors like milk supply, export competitiveness, and potential new cheese production capacity.
