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Domestic Cheese Demand Pushes Class III Futures to Highs

Strong domestic cheese demand propelled Class III futures to fresh life-ofcontract highs this week. On Thursday, thirdquarter contracts settled at an average of $21.28 per cwt., an astoundingly lofty value considering U.S. cheese production capacity and fierce competition for exports. Indeed, USDA’s on-the-ground analysts in Europe, New Zealand, and Australia forecast that processors in all three nations plan to up cheese output this year as fluid milk demand wanes and milk powders offer slimmer profit margins. Today’s U.S. cheese prices are not likely to win a lot of new business, and exports will certainly fade later this year. In the long run, that’s likely to weigh on cheese and Class III values. But for today, the bulls have plenty to chew on. Record-shattering cheese exports in November through April helped to clean up U.S. cheese inventories, and domestic demand has further chipped away at supplies, with major retailers promoting the cheap cheese they bought earlier this year. Fresh Cheddar is likely to be hard to come by this summer. Sweltering temperatures in California and the Southwest have trimmed milk production there, and the forecast calls for unusually hot weather in the Midwest throughout the rest of June. All these factors lifted cheese prices in Chicago once again. CME spot Cheddar barrels climbed 6.5ȼ to $2.02 per pound. Blocks leapt 12.5ȼ to $1.97

June 17, 2024



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