Domestic Cheese Prices Strengthen

August 27, 2013 —  Cheese prices at the Chicago Mercantile Exchange have seen a correction after taking a dive early last week. FC Stone’s Dave DaveKurzawskiKurzawski joined us on Tuesday’s DairyLine to discuss.

“When we were south of $1.70 that seemed to be a little too cheap relative to the world prices,” he said. “There’s no question there is product available on the fat side.”

We are seeing some large inventories to work through for both for butter and cheese, he said.

“Also, we have ho-hum milk production growth right now pegged against international demand that is more robust than domestic demand has been for the month of August, which is pretty typical.”

Domestic demand for U.S. product really starts to pick up past the Labor Day Holiday, so Kurzawski cheese prices to strengthen back up to the mid $1.70’s or low $1.80’s as we move into the month of September.

He’s also keeping an eye on the grain markets after the recent heat dome over the Midwest.

“There is some question whether that’s going to hamper the bean market, more so than corn,” he said. “With the Pro Farmer tour underway and trimming estimates from July on already corn and beans, I think that lends support to the 2014 contracts for milk.”

He says for producers looking to hedge, – “Certainly let the market come up a little bit as we get into the holiday demand time frame,” he concluded.

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