After trading at $1.60 for 62 consecutive sessions, the block cheese price finally fell this week at the Chicago Mercantile Exchange. As of Oct. 30, it had fallen 10 cents in just three trading sessions. However, the price slide arrived too late to influence the direction of October milk prices, which were announced higher today by the USDA.
According to the USDA’s class prices’ announcement this morning, the Class III price topped $14 for the second month in a row during October. It climbed 9 cents — to $14.39.
The Class II and IV prices also crept higher. The Class II price gained 8 cents — putting it at $10.84. The Class IV price gained 9 cents — putting it at $10.16.
Many were expecting the block market’s two-month stronghold to weaken by the end of October, so the 10-cent tumble comes as no surprise. Now, the question remains as to just how low the block price will go from its position at $1.50 on Oct. 30.
“The real indication of future cheese prices is commercial disappearance, or the amount of cheese that was consumed,” says Ken Bailey, Penn State dairy economist.
According to the latest commercial disappearance figures, released by the USDA on October 28, total cheese use declined 2.4 percent during August compared to a year ago.
If demand continues to remain sluggish, and milk production rebounds during the third quarter, cheese prices could weaken rapidly, Bailey says. However, if the milk supply stays about even with a year ago and demand picks up a bit during the next few months, cheese prices could weaken more gradually, he adds.
USDA, Chicago Mercantile Exchange