MD_DA830                                                         
DA                                                               
MD DA830 Cheese - Midwest                                        

MADISON, WI.  May 06, 2015 (REPORT 18)                           

MIDWEST CHEESE:      

Although block market prices have been extremely stable, unchanged for 
11 trading days at the CME Group, this week's sharp up and down 
movement in barrel prices reflects the apparent continuing general 
tightness of barrel supplies contrasted with the ability of sellers to 
quickly respond to price opportunity, notwithstanding overall supply 
tightness.  Far fewer cheese plants manufacture barrels than blocks, 
so the ongoing discussion of cheese manufacturing often focuses less 
on barrels than blocks.  Of the barrel manufacturers, many use much of 
their production for their own purposes but make occasional or low 
volume sales to customers.  A smaller number manufacture barrels 
primarily for sales to external customers.  Most of them have 
committed production for weeks into the future.   With demand for 
barrels being seasonally strong, even plentiful milk supplies and full 
production schedules leave uncommitted supplies in short supply.  
Multiple buyer calls from customers last Friday to some manufacturers 
seeking spot barrel availability were unable to secure sales.  Most 
plants have peaked in their ability to produce barrels.  Nevertheless, 
a sharp increase in barrel prices Monday on CME Group trading brought 
many barrel sellers to market Tuesday, attracted by the quick price 
spike over previous prices, in sufficient numbers to lower the market 
below where it had been.  While barrel seasonal demand is often 
ascribed to demand for process cheese used in grilling, a factor 
sometimes overlooked is the upward trend in demand for cheese curds 
from retail customers, restaurants, and farmer's market sales.  Cheese 
curds are more profitable to manufacturers than barrels.  Meeting the 
rising demand for cheese curds reduces the output of barrels for 
plants in the cheese curd business.  The block market remains 
extremely stable.  Sales are mostly strong with evidence that some 
cheese is being held by buyers who view current pricing as favorable 
considering the potential for higher future prices.  The National 
Retail Report - Dairy (DMN) found that May 1 to May 7  Midwest ads for 
8 ounce shredded cheese have a weighted average advertised price of 
$2.12, 22 cents lower than the national average, $2.34.  Midwest 
prices range from $1.78 - $2.50.  One year ago the national average 
price was $2.37.  For 8 ounce blocks, the Midwest average price is 
$2.06, 21 cents lower than the national average price, $2.27.  Midwest 
ads are priced from $1.78 to $2.50.  One year ago the national average 
price was $2.43.  Dairy Products (NASS) reports March 2015 U.S. total 
cheese production, 987.2 million pounds, leads March last year by 1.8% 
and February this year by 11.3%. For various types of cheese, March 
2015 U.S. production compared with March 2014 includes: American, 
+1.7%; cheddar, +0.5%; total Italian, +1.5%; and Swiss, +3.6%.  

  

In the Central region, cheese production for March 2015 compared with 
March 2014 was: total cheese, +4.4%; American cheese, +4.0%; cheddar 
cheese, +5.6%; total Italian cheese, +4.2%; and mozzarella cheese, 
+2.1%.  Wisconsin wholesale prices for 1,000 to 5,000 pound mixed lots 
of process cheese decreased $.0050, Grade A Swiss Cuts 6 - 9# 
decreased $.0800, and the remaining varieties increased $.0075.  The 
CME Group April 2015 monthly average price for barrels, $1.6135, is up 
$.0845 from March but down $.5707 from April one year ago.  Blocks' 
April average price, $1.5890, is up $.0341 from March but down $.6549 
from one year ago.  In CME Group trading Wednesday, Barrels closed at 
$1.6150, down $.0025 from last Wednesday and Blocks closed at $1.6100, 
unchanged from last Wednesday.  
                                            
                                                                 
WISCONSIN WHOLESALE SELLING PRICES:  DELIVERED,                  
DOLLARS PER POUND (1000 - 5000 POUNDS MIXED LOTS)                
                                                                 
Process American 5# Loaf                   : 1.7250-2.0850       
Brick And/Or Muenster 5#                   : 1.9875-2.4125       
Cheddar 40# Block                          : 1.7150-2.1100       
Monterey Jack 10#                          : 1.9625-2.1675       
Blue 5#                                    : 2.2550-3.2425       
Mozzarella 5 - 6# (Low Moisture, Part Skim): 1.7875-2.7275       
Grade A Swiss Cuts 6 - 9#                  : 2.6900-2.8075       

100C eric.graf@ams.usda.gov  608.557.7005
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: www.ams.usda.gov/dairymarketnews
Dairy Market News database portal: 
http://www.marketnews.usda.gov/mnp/da-home