February 14, 2014 — Cash cheese prices set new record highs at the end of January but plunged last week, although they’re still unseasonably high and still above $2 per pound.
On Friday’s DairyLine, Lee Mielke asked FC Stone dairy broker Dave Kurzawski how low they would go. Kurzawski said there are two camps out there, one that believes we’re settling into a stabilized price at $2.1050 per pound on the blocks and $2.06-$2.07 on the barrels.
The other camp believes that the market clearing price is somewhere below $2, perhaps $1.90 or $1.85 per pound and the split between the camps is 50/50.
He thinks there is cheese that is coming to the CME but there’ll be buyers stepping in although end users are still in a “wait and see mode.”
Export prospects for 2014 are still good, according to Kurzawski, but will “ebb and flow like any other year.”
“We’ve spent the better part of 8 to 12 months looking at burgeoning export prospects,” he explained, “And they will ebb and flow and if that’s so we could be at a period now where things start to slow down as milk production comes on, pretty strong out there in Europe.
He adds that there’s a “very competitive atmosphere” right now on butter and cheese out of Europe where “they’re taking some of our business.” As that happens, he warns that “our price has to adjust to be competitive.”
As to his read on butter overall, salted butter in the U.S. is largely tight, he said, but exports have slowed some. He said we may be entering a period now of “quiet trading, sideways, in the mid $1.70s” until we get to the Easter holiday.