MD_DA830
DA
MD DA830 Cheese - Midwest
MADISON, WI. October 31, 2012 (REPORT 44)
MIDWEST CHEESE:
During October, Barrel prices have changed direction four times, ranging
from $1.9175 to $2.0800. Blocks changed direction three times, ranging from
$2.0000 to $2.1200. For each, the monthly low occurred on October 19 and
the high one week later on the 26th. Manufacturers do not provide
explanations for much of this trading price movement, based on manufacturing
stocks and sales, especially for a swing from low to high in one week. Each
have declined from the high, with Barrels down 8 cents this week by
Wednesday to $2.000 and Blocks down 1 cent to $2.1100. A manufacturer
referred to these as "crazy swings", observing that during the last week
into this week, his plant "received the same amount of milk, made the same
amount of cheese, and pushed it out the door". Orders are being met and
inventories are "comfortable". Store orders were stable during the week.
Moreover, some manufacturers in the Midwest note that they expect cheese
manufacturing volume to increase in coming weeks as more milk becomes
available seasonally beginning after Thanksgiving. Plants expect to make
more cheese as a result. This leaves the current manufacturing/sales
situation as mostly stable in the present, but expected to generate more
cheese in the near future, which some manufacturers have difficulty
reconciling with recent CME monthly low to high price movement. From a
manufacturing perspective "the overall cheese supply/demand situation is
probably fairly well in balance", according to a large cheese manufacturer.
There is concern that continuation of such CME price swings will cause
retailers to be more tentative in ordering, which could adversely affect
sales in the longer run. Cheese retail advertising volume reported in the
National Dairy Retail Report has not recovered from the decline two weeks
ago. Cheese ads this period are nearly unchanged from two weeks ago, up
0.7%, following a 25.2% decline four weeks ago. The largest number of
cheese category ads during the current survey period, 39.2%, are for 8 ounce
shredded cheese, up slightly from 36.3% the last period. The next highest
at 34.9%, is 8 ounce blocks, down slightly from 31.5% last period. The
remaining varieties are 1 pound block, 9.6%; 2 pound block, 9.3%; and 1
pound shredded, 6.9%. The weighted average advertised price of 8 ounce
shredded declined 8.8% to $2.19; 8 ounce blocks increased 2.1% to $2.44; 1
pound blocks increased 3.1% to $3.69; 2 pound blocks decreased 19.4% to
$5,62; and 1 pound shredded decreased 8.9% to $3.28. On November 1 the
Kansas City Farm Service Agency Commodity Office will announce contract
awards to purchase a maximum of 54.3 million pounds of natural American
cheese for delivery between January 1, 2013 and December 31, 2013.
WISCONSIN WHOLESALE SELLING PRICES: DELIVERED,
DOLLARS PER POUND (1000 - 5000 POUNDS MIXED LOTS)
Process American 5# Loaf : 2.2175-2.9225
Brick And/Or Muenster 5# : 2.4550-3.0150
Cheddar 40# Block : 2.4550-3.4400
Monterey Jack 10# : 2.4250-3.4400
Blue 5# : 2.7200-3.7050
Mozzarella 5 - 6# (Low Moisture, Part Skim): 2.3000-3.5400
Grade A Swiss Cuts 6 - 9# : 3.0050-3.1225
1:00 CDST eric.graf@ams.usda.gov
Midwest Cheese Market
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