Market Talk with Mary Ledman

The downfall in cheese prices continued Monday, with both the blocks and barrels losing another penny and a half. The market awaited Tuesday’s September Milk Production report but market analyst, Mary Ledman, Principal of Keough Ledman and Associates in Libertyville, Illinois, said in Tuesday’s DairyLine that Thursday’s Cold Storage report likely has more significance to traders as an indicator of the market going forward.

She said she was surprised at the downturn in cheese but the march past $1.50 per pound was also a surprise. The tightening in nonfat dry milk, other milk powder, the whey complex, all those prices have increased, she said, and it’s difficult to imagine the cheese market under $1.40, given the strength of the powder market as well as the international markets at this point. “The recent downward breather in cheese prices may end up supporting the market longer term than if we had raced up to $1.60.”

She predicted that culling will increase through the fourth quarter and would have done so, with or without the current CWT herd removal. What will be interesting, according to Ledman, is if CWT gets as many submitted bids as in the past. The strengthening of the markets could cause producers to stay in the business longer.

When asked about current cheese demand, Ledman said cheese demand has been very good through this year. American style cheese is up over 4 percent, she said, other styles are approaching 2 percent, but she fears that a significant run up in cheese prices could impact demand in 2010 and we not keep this strong demand that we’ve experienced in 2009.