If you sell into the wholesale market, you've probably felt this year's supply picture in your own numbers even before you saw it in a report. Milk production has been running meaningfully ahead of last year, and that abundance has pushed cheese prices down from where they sat earlier in the year. For a buyer that's a nice problem. For a producer negotiating a fall contract, it's the reason this month's conversations with distributors are taking longer than usual.
We've heard from wholesale members in both camps this summer. Some are locking in fixed-rate contracts now, on the theory that a known price, even a modest one, beats riding a spot market that could soften further before it firms back up. Others are staying on floating or spot arrangements, betting that current pricing is closer to a floor than a ceiling and that they'd rather capture any recovery than trade it away for certainty. Neither approach is wrong. They're different bets on the same uncertain fall.
What's actually different about this year
The wrinkle worth naming plainly: feed costs have come down from their recent peak — August's average feed cost per hundredweight of milk was reportedly the lowest in nearly five years — which is helping margins even as milk prices soften. That's not the same squeeze from a few years back, where both sides of the ledger moved against producers at once. It's worth factoring into any contract conversation rather than assuming this year looks like the tightest one members remember. A producer whose feed costs have eased has more room to accept a flatter milk price than the headline number alone would suggest, at least for now; projections for later this year and into next still look more favorable than the current quarter.
It's also worth remembering that "abundant supply" isn't evenly distributed, and neither is that feed-cost relief. A member running a tight, efficient operation with feed already locked in near this summer's lower prices is in a very different negotiating position than a member who's still buying on the spot market and exposed if grain prices firm back up before harvest wraps. Know which one you are before you sit down with a distributor, because the contract that makes sense for one isn't the contract that makes sense for the other.
It helps to think about this as a margin question rather than a milk-price question. A flat or softening milk price paired with meaningfully lower feed costs can still leave a producer better off than a higher milk price did a year or two ago, when feed was eating a much bigger share of the check. That's cold comfort if your own feed bill hasn't come down as much as the national averages suggest, which is exactly why the "know your own numbers" advice below matters more than it might in a simpler year.
What to bring to that conversation
Whichever way you lean, bring numbers, not instinct. A rough sense of your own breakeven, updated for this year's feed and energy costs, matters more in a negotiation than a general sense of "prices feel low." Members working through this kind of calculation have told us the Pricing & Margin for Specialty Cheese course was useful groundwork before a contract conversation, not after one.
And if you're weighing a multi-quarter commitment, talk to your regional rep first. They've heard how a range of contract structures have played out across the membership this year and can flag terms worth pushing back on before you sign, not after.
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.