Cheese rebounds, whey tells a different story

Cash cheese found its footing again this week after three straight weeks of declines. Cheddar blocks closed several cents higher than a week ago and well above where they sat this time last year, and barrels moved up too, though by less, which widened the spread between the two a touch. If you've been holding off on a fall pricing conversation waiting to see whether the recent slide was the start of something or just a pause, this week's bounce is a reasonable point to restart that conversation — though we'd stop short of calling one rebound a trend.

What's actually moving the cheese number

The read from the plants is fairly plain: less overall milk and somewhat lighter Cheddar production are running up against demand that's held up better than the summer heat would suggest. Grilling season usually drags on cheese demand a little as consumers eat lighter, and it has this year too, just not enough to offset the tighter supply side. Milk headed into cheese vats has also been getting stretched further than usual — plants have been leaning more heavily on nonfat dry milk to fortify batches as fluid milk supply runs shorter than normal for this time of year, which is as much a supply-management story as a demand one.

Nonfat dry milk itself has climbed for similar reasons and is trading well above where it sat a year ago. If your plant uses it as a production input rather than just watching it as a market indicator, this is worth pricing into your own cost sheet now rather than at your next scheduled review.

The story underneath: whey, and what we're watching next

The quieter number this week is dry whey, which ticked up slightly but remains well below where it stood a year ago — and the reason has nothing to do with domestic cheese demand. African swine fever has cut sharply into hog populations in one of the largest overseas markets for U.S. dry whey, which is a problem for that market's feed demand specifically — a meaningful share of the whey and permeate the U.S. normally ships there goes into hog feed, and a smaller herd needs less of it. Whey is a byproduct of cheesemaking, not a separate business decision, so a plant that can't move whey as profitably is effectively running its cheese production at a thinner overall margin than the cheese price alone would suggest.

That matters for members beyond the whey producers directly. A plant absorbing a softer whey market has less room to be flexible on cheese pricing with its distributors and wholesale buyers, even while the headline cheese number looks healthy. If you've been surprised that a supplier held firm on price despite this week's good cheese news, the whey side of their business is a likely reason why, and it's worth asking about directly rather than assuming it's simple negotiating room.

Two threads worth following into the fall: whether this week's cheese rebound holds for a second week or proves to be a single good print, and whether the hog losses driving the whey slowdown show signs of stabilizing overseas. Neither is something an individual member can move, but both will show up in your cost sheet or your buyer's mood before they show up in a headline. We'll keep flagging both in our regular market coverage, and if your business is exposed to the whey side specifically, the trade panel format from this year's annual conference is one the Education Committee is considering bringing back as a standing members-only webinar — let us know if that would be useful to you.

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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.