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  December 17, 2010

By Sherry Bunting

As retail cheddar cheese prices closed the month of November at a 23-month high, the mid-December block cheddar price on the Chicago Mercantile Exchange (CME) fell to an eight-month low.

This happened despite the 2010 phenomenon of cheese exports soaring above imports for the first time in the history of USDA records as far back as 1970. From January through October 2010, cheese exports were up 62% from a year ago, and cheese imports were down 18% from a year ago. That is a HUGE net removal of cheese versus a year ago.

Despite brisk sales of cheese domestically and internationally, and despite an international cheese price that is running higher than the U.S. price, and in the face of retail cheddar prices paid by consumers topping $5 per pound... the CME price for blocks and barrels continued to slide to their lowest levels since March.

A near record-high number of loads of block cheddar (45) traded on the CME Wednesday at prices 12 cents per pound below the previous midweek. The December 15 CME block price was pegged at $1.3225/lb after earlier bids went as low as $1.3150 before sellers would trade product in the $1.32 to $1.3250 range. This put Wednesday’s block cheddar price three cents under the barrel price of $1.35/lb. By Friday, Dec. 17, the block price remained at $1.3225 and barrels increased a penny to $1.3625/lb.

This week's CME cheddar prices were 20 to 40 cents per pound below the same week a year ago. On Dec. 15, 2009 (year ago), blocks were reported at $1.70/lb and barrels at $1.46/lb. Those higher CME cheddar prices a year ago occurred during a time when we did not have high exports of cheese as we have this year, and at a time when the retail average cheddar price was 58 cents per pound lower. Go figure!  

So, while cheddar prices slid 20 to 40 cents per pound (32%) below a year ago on the CME in the first two weeks of December, consumers spent November paying a whopping 58 cents per pound (11%) more than last year for natural cheddar cheese at the grocery store in November.

The U.S. retail price average for natural cheddar cheese for the month of November 2010 was reported by the USDL Bureau of Labor Statistics at $5.00 per pound, up 35 cents per pound (7%) higher than the previous month of October, and the highest retail cheddar price paid by consumers in 23 months.

Incidentally, according to Friday’s USDA Dairy Market News report (Dec. 10), some cheese manufacturers have reported they are unable to acquire the needed milk volumes to fill their current orders.

CME Butter at $1.65/lb

Spot butter on the CME ticked four cents higher this week to $1.65/lb Friday, Dec. 17. According to USDA Dairy Market News, some butter producers across the country are stating that international sales opportunities are being booked and 82% butter is being generated to fill those needs. 


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