August 15, 2014 — We’ll Have a $2 Cheese Market at Least Through the End of August. Incredible cash prices are being seen in Chicago and continue to defy world market levels, with block cheese up 6 cents Thursday to the highest level since April 28, and barrels up 3 1/2-cents. Butter came back to life this week with a vengeance, skyrocketing 16 cents Thursday, to $2.66 per pound, a new high for 2014 beating late July’s $2.62, and may pound on the door of the all time record of $2.81 in September 1998.
FC Stone dairy broker Dave Kurzawski said in Friday’s DairyLine that domestic demand for cheese and butter is still very strong and may continue for some time. “I don’t know where the top of these markets will be,” he admitted, “I don’t know if anybody can answer that question, but what has happened here is that there remains a strong demand for fat and demand for butter.” Cream demand remains strong as well, he said, although cream demand has ticked down a little but “nothing too worrisome from the standpoint of the market bulls.”
Cheese has “chopped sideways, around the $2 level for several months now,” Kurzawski explained, “And now we’re starting to break back to the upside and all the bearish news globally has yet to translate into anything here domestically and so from that standpoint, if there’s still tightness the market might have to go up into a price where they’ll bring some excess inventory to the exchange.” Things are stronger than most people expect, he said, and “No one knows how long it will last but I think we will have a $2 cheese market at least through the end of August.”
The “bearish” news would appear to be the threat of rising milk production and Kurzawski says globally there’s no doubt about that and things will be changing in that regard next year in Europe and there’s concern about good weather in Australia and New Zealand as the El Niño scare “loses its steam,” but “Domestically here we have yet to see any of these real high prices that producers are receiving really translate into much of a big milk production situation in 2014 and we’ll probably see about a 1 1/2 percent increase and that’s just not enough at this point in time,” he concluded.