MD_DA830                                                         
DA                                                               
MD DA830 Cheese - Midwest                                        

MADISON, WI.  November 18, 2015 (REPORT 46)                      

MIDWEST CHEESE:                                                  
                                                                 
Weakening cheese prices are increasingly hanging over cheese production 
scheduling decisions. The ever present factor of spot milk is at the core 
of the calculations, especially with long holiday weekends ahead this 
month and next. With the block / barrel price spread today at $.1375, 
manufacturers expect price narrowing toward the generally accepted normal 
situation where barrel cheese sells for a $.0300 to $.0400 discount to 
block cheese. Many manufacturers and brokers believe there will be future 
block weakness to narrow the price spread, rather than barrel strength. 
Acting on this expectation, a number of Midwest cheese manufacturers are 
being very cautious in purchasing spot milk, to protect the cheese cost 
basis if block prices fall in coming weeks. During the last week spot milk 
availability has tightened, with some sellers being more aggressive in 
price negotiations than is typical. Sellers will have more milk to move as 
holidays approach. Negotiations are underway for holiday spot milk, with 
some cheese manufacturers countering milk seller offers of $2.00 to $3.00 
under class, with $5.00 under class. Spot milk for Thanksgiving next week 
is being discussed in the $3.00 to $4.00 under class range. Cheese 
manufacturers feel confident in holding out for desired discounts through 
the holidays due to the volume of milk sales offers coming forward, 
including  from even milk suppliers who normally do not offer spot milk. 
Most manufacturers are generally able to easily fill cheese orders but 
would welcome finalizing spot milk purchases at acceptable discounts to 
slightly increase sales flexibility. Erratic purchasing by some retailers 
has led to some "order fires," leading manufacturers to juggle shipments 
to accommodate erratic last minute orders. The DMN National Retail Report 
- Dairy shows that November 13-19 Midwest ads for 8 ounce shred cheese 
have a weighted average advertised price of $2.38, 1 cent lower than the 
national average. Midwest prices range from $1.50-$2.69. One year ago, the 
national price was $2.56. For 8 ounce blocks, the Midwest average price is 
$2.07, 28 cents lower than the national average price. Midwest ads are 
priced from $1.89-$2.69. Last year, the national price was $2.61. 
Midwestern wholesale prices are unchanged for grade A Swiss cuts, down 
$.0550 for process, up $.0200 for all other types. In CME Group trading 
Wednesday, barrels closed at $1.4225, down $.1475 from last Wednesday and 
blocks closed at $1.5600, down $.1200. 

WISCONSIN WHOLESALE SELLING PRICES:  DELIVERED,                  
DOLLARS PER POUND (1000 - 5000 POUNDS MIXED LOTS)  
                                                                           
Process American 5# Loaf                   : 1.6450-2.0050       
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#                  : 2.7775-2.8950       

1500C eric.graf@ams.usda.gov  608-557-7010
USDA/AMS/Dairy Market News, Madison, Wisconsin
Dairy Market News website: http://www.ams.usda.gov/market-news/dairy
Dairy Market News database portal: http://www.marketnews.usda.gov/mnp/da-home