Despite being forced to dump milk and watching prices sink earlier this year, things are looking up right now for the dairy industry. The National Milk Producers Federation (NMPF) saying that dairy prices have rebounded significantly from COVID-19 as farmers have adjusted their milk production, consumers have boosted retail demand, and government purchases have also kicked in to help offset lost food-service sales.
Peter Vitaliano, the chief economist for NMPF saying that, "The markets currently are looking like there's going to be a very strong rebound, and prices will get to a more normal level in the second half of this year."
Coupled with that, CME block cheddar prices have been setting new record highs this month. Experts say it's being driven primarily by tight supplies of fresh cheese. They report USDA's food box program is competing with restaurants that are reopening coupled with strong retail sales.
Last week, cheddar blocks closed at an all -time high of $2.70 per lb. Farm Journal's Milk Business reporting cheese plants along the East Coast are running at full capacity and on the West Coast some are running at 125% capacity to try and keep up with demand.
And while this is all good news for producers, the recent spike in prices could come at a cost. Experts say U.S. cheese prices are now the most expensive in the world and that could hurt the export business. As for expansion, after several tough years many producers have a lot of debt to retire before they can even consider it as an option.