For most of the winter, the milk price forecasts our members were pricing against and the milk price the market was actually paying lived in two different documents. Last week those documents got a lot closer to agreement. Class III firmed through the month, and the spread between what a make sheet assumed in January and what a settlement check paid in April has mostly closed.
The mechanics are not exotic. Cheese demand strengthened into the end of April as institutional buying picked back up and retail cases stayed busy, and that pulled block and barrel prices up together rather than in the usual seesaw. Dry whey firmed at the same time, which matters more than it sounds like it should — a Class III number is a blend, and whey pulling its own weight is part of why April's price cleared last winter's low by a wide margin.
None of that means every member felt it the same way. A wholesale account with a June contract already signed at February's number did not get to renegotiate up. A small producer selling mostly direct, on the other hand, has more room to move a price list this week than a make sheet built four months ago assumed. If your pricing has not been touched since the winter numbers came in, this is a reasonable week to look at it again — not to chase the market day to day, but to confirm the assumptions still hold.
There's also a spot-versus-futures story worth flagging for anyone who watches the board more closely than the settlement check. Block and barrel spot prices spent a chunk of April moving in fits and starts — a strong day here, a pullback there — while futures traders priced in a steadier climb further out on the curve. That gap between what's trading today and what the market expects a few months from now is normal, but it means a headline about "cheese prices surging" can describe the futures curve more than this week's spot trade. If you're using a market report to plan a price list, check which one you're reading.
What tends to lag
Milk price strength shows up in a settlement check before it shows up in a retail shelf tag, and it shows up in a shelf tag before it shows up in a wholesale contract renewal. If you sell across more than one of those channels, expect this month's numbers to land unevenly across your business, and don't be surprised if your distributor rep is still working off an older price sheet than the one you're now pricing against. Members who sell both wholesale and direct have told us the lag between those two channels is often six to eight weeks, which is roughly how long it took this spring's price move to show up in most of the letters and calls we've fielded.
What we're watching
Farm to Families box purchasing, which has been propping up institutional cheese demand since last year, is scheduled to wind down at the end of May. What happens to demand after that program ends is the open question for early summer, and it's one we'll keep flagging as more data comes in. Dry whey's strength is worth watching too — a Class III number is a blend of cheese and whey values, and if whey cools off before cheese demand does, the headline price could soften even while your cheese case stays busy. If you price on a lag, now is a good time to build a note for yourself about what June looks like without the institutional buyer in the market, and to check that note against your own numbers rather than the national average.
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.