CME Spot Block Cheddar Declines to Lowest Price Since May

CME cheese price declines persisted last week but at a slower rate versus mid-January’s steeper losses. Market sentiment leans bearish in anticipation of heavy expected milk and cheese production in the coming months. The block Cheddar settlement on Friday was down $0.0350 per pound versus the prior week to the lowest value since May 12, 2020; the price declined solely on lower offers as no cheese traded hands. Barrels were down a quarter-cent versus the prior Friday and have traded within a penny range for seven consecutive sessions. 21 loads traded hands as buyers and sellers each find value at the current price level.

USDA cautioned of notably higher milk volume for this time of year and reported that spot milk was available for as much as $8.50 below the Class price. It is likely milk dumping will increase soon as volume overwhelms processing capacity. While new Food Box vendor announcements could provide slight but temporary cheese price spikes through April, there is no fundamental factor that would increase cheese values from current levels in the coming months.

Senate Ag Committee Schedules Vilsack Confirmation Hearing

The Senate Agriculture Committee will meet on February 2 to consider the nomination of Tom Vilsack for USDA Secretary. The confirmation process is expected to be smooth with few hurdles as Vilsack has broad support from both parties to lead the agency. Vilsack previously served as USDA Secretary for the entirety of the Obama administration and has spent the last four years as President and CEO of the US Dairy Export Council. Once Vilsack is confirmed, Krysta Harden, USDEC’s chief operating officer, will become President of USDEC.

Last Week’s Reports & Analysis