MD_DA830 DA MD DA830 Cheese - Midwest MADISON, WI. July 29, 2015 (REPORT 30) MIDWEST CHEESE: Signs of change are afoot in Midwest cheese manufacturing and sales, after several months of relatively similar news. While most cheese plants are receiving the milk volumes they want, contracted milk volumes and components are declining in most locations. This is increasingly being noted and reflected in manufacturing decisions. Surplus milk supplies are getting tighter and less price favorable. Many Midwest cheese producers planning ahead for acquiring surplus milk are paying prices around $1.00 below Class for deliveries through July. A few last minute offers of limited supplies of surplus milk were made late last week at $2.50 under, with some cheese producers declining the offers due to short notice and timing limitations. Extra spot milk contracted beginning August 1 is tending toward 50 cents above Class and that premium price is expected to increase in the near term. Many manufacturers have taken note and the view forward is already shifting from dealing with copious milk volumes, to dealing with much tighter milk supplies. Some manufacturers are now hesitating to agree to sell additional cheese to regular contract customers through the later part of 2015 because the manufacturers are not certain they can obtain enough milk to deliver the cheese volumes in a few months. These manufacturers expect to be impacted by declines in milk production as well as the expected August increased demand for school food programs, which will leave them with insufficient milk supplies to increase contracted deliveries. To the extent that some surplus milk remains available, other plants are now more cautious about accepting it unless the resulting near term cheese production has sales commitments. This is a change from recent weeks when manufacturers felt more confident in readily accepting discounted surplus milk, believing that that if they made cheese, it would sell. Occasional cheese buyers must work harder to find available cheese from manufacturers, due to an increasing focus on satisfying regular customers as milk supplies tighten. The DMN National Retail Report - Dairy shows that July 24 - 30 Midwest ads for 8 ounce shredded cheese have a weighted average advertised price of $2.04, 39 cents lower than the national average. Midwest prices range from $1.49 - $3.29. One year ago the national price was $2.33. For 8 ounce blocks, the Midwest average price is $2.10, 17 cents lower than the national average price. Midwest ads are priced from $1.67 to $3.29. Last year, the national price was $2.57. Midwestern wholesale prices are unchanged for Swiss cuts, up $.0275 for process, and up $.0200 for all other types. NASS reports that June 30, 2015 East North Central region (Wisconsin, Illinois, Michigan, Indiana and Ohio) American cheese stocks were 111% of June 30, 2014, and 102% of May 31, 2015. East North Central region other cheese stocks were 113% of June 30, 2014 and 104% of May 31, 2015. Total U.S. natural cheese stocks on June 30, 2015 were 108% of June 30, 2014 and 103% of May 31, 2015. In CME Group trading this week Wednesday, Barrels closed at $1.6900, up $.0450 from last Wednesday and Blocks closed at $1.7000, up $.0350. WISCONSIN WHOLESALE SELLING PRICES: DELIVERED, DOLLARS PER POUND (1000 - 5000 POUNDS MIXED LOTS) Process American 5# Loaf : 1.7425-2.1025 Brick And/Or Muenster 5# : 2.0425-2.4675 Cheddar 40# Block : 1.7700-2.1650 Monterey Jack 10# : 2.0175-2.2225 Blue 5# : 2.3100-3.2975 Mozzarella 5 - 6# (Low Moisture, Part Skim): 1.8425-2.7825 Grade A Swiss Cuts 6 - 9# : 2.7275-2.8450 1300C eric.graf@ams.usda.gov 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