Cheese Domestic Consumption is not Growing, But Production is Growing.
- ZISK
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More than half of U.S. milk is used for Cheese. Dairy farms supplying the cheese producers are paid primarily on the value of milk protein and butterfat components. As covered in prior posts, the farm revenue from milk protein and butterfat are currently low. The price of milk protein is based on the cheese price minus the butterfat price (paid for separately) shown in the formula below.
Protein Price = ((Cheese Price – 0.2519) × 1.383) + ((((Cheese Price – 0.2519) × 1.589) – Butterfat Price × 0.91) × 1.17)
The price per pound of cheese is currently very low and trending lower. This reduces the value of milk protein (Chart I). Why is the price of cheese at levels typical of the prices 10 years ago? The price of cheese is based on the wholesale price of Cheddar cheese. With one exception, all data in this post is based on 12-month moving averages to eliminate volatility.
John Geuss
May 15, 2026
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