If you've felt like cheese markets have been on a rollercoaster all year, the federal weekly dairy market report this week confirms it wasn't just a feeling. Block and barrel cheddar prices, which had spent much of 2020 whipsawing through some of the widest swings on record, turned down again in the first days of November — after a fall run-up that had a lot of members finally catching their breath.
For members pricing holiday orders right now, that pullback matters more than it would in a normal year. Here's what's behind it and what to do with it.
Why the swing, and why it's bigger than usual
2020 has produced the widest gap between the lowest and highest milk prices most of us have ever priced against — a stretch driven by pandemic-era food-service collapse in the spring, a government cheese-purchase program that pulled inventory hard through summer, and a demand snapback that pushed prices up sharply into fall. This week's pullback looks like the market cooling from that fall run, not a new collapse. But if your pricing sheet was built off October's numbers, it's worth a second look before you quote holiday gift boxes or year-end wholesale renewals.
The all-milk price forecast for the fourth quarter is still meaningfully above where the year started, and exports have stayed a genuine bright spot — American cheese has now out-shipped the prior year for more than a full year running. That's the backdrop worth keeping in mind if a distributor calls asking why your case price hasn't come down as fast as the spot market: spot swings and your actual cost of production are two different conversations, and it's fair to say so.
What this means for your holiday numbers
A few things worth doing this week if you haven't already:
- Re-check any order you quoted off an October price sheet. If your supply contract floats with the market, a swing like this one can move your landed cost meaningfully between quote and delivery. Build in a re-price clause for anything going out past mid-December.
- Don't chase the spot number down on your own case price. Retail cheese sales have stayed strong through the pandemic as more people cook and snack at home — this is not the moment to discount into a soft margin because a commodity index moved.
- If you took a government relief payment tied to 2020 production this year, that application window is still open into December. It's separate from your day-to-day pricing, but it's worth a few minutes if you haven't filed and you think you're eligible — check with your accountant on the specifics rather than relying on secondhand advice.
The volatility isn't over. If anything, the last two months of a year like this one are exactly when a market can move twice before your invoice clears. Members who've weathered it best this year are the ones re-checking their cost sheet weekly instead of quarterly — worth adopting as a habit even after things settle down.
The same weekly report also flagged something worth passing along to anyone selling through a distributor: cold storage inventories going into the holidays are being described as adequate rather than tight, which is part of why this pullback happened even as retail demand stayed firm. That combination — steady demand, comfortable supply — tends to mean a quieter December than 2020 has trained us to expect, but "quieter" is relative in a year that's already delivered the widest price swing on record.
If you're a smaller producer who doesn't sell against the commodity index directly, none of this changes your cost of production. What it changes is your negotiating position with anyone who does — a distributor, a regional grocer, a co-packer. Knowing that the market moved down on comfortable supply rather than falling demand is a different conversation than knowing only that "the price went down." Bring the context, not just the number, to your next pricing call.
The International Cheese Federation (ICF) and More Cheese are entirely fictional. This post is demonstration content created for MemberJunction. All people, organizations, events, courses, certifications, figures, and quotations in it are invented, and nothing here represents a real association, a real business, a real person, or real professional advice.