Three weeks ago this newsletter would have told you block cheese had never been more expensive. Today it is telling you the opposite, and both of those things are true, which is the story of this market right now.
Block cheddar set a record above $3.00 a pound in the middle of July. Through the back half of the month it kept sliding — down into the low $2.20s by month's end — and this week it fell further still, into territory not seen since May. Barrels followed the same path down. If your wholesale contracts are indexed to either number, you already felt this in your last settlement, and if you weren't watching closely, you may be looking at a number that surprised you.
What actually happened
The July spike was not really about cheese. Federal purchasing under an emergency food-box program had been buying dairy products in volume, restaurants were reopening in a lot of states, and some schools were signaling an in-person fall, all while milk production was running a little tight for the season. That combination pushed buyers to bid the board up fast, and a third round of that same federal purchasing was announced in late July on top of it. None of it reflected steady retail demand on its own, and boards that move on a purchase program rather than a grocery aisle tend to give the gains back just as fast once the program's near-term buying slows or restaurant reopenings stall.
That is roughly what's happening now. A number of states have paused or reversed restaurant reopenings as case counts climbed through July, and that took real volume out of the foodservice side of the ledger just as the initial burst of program buying worked its way through the system. Retail cheese sales have stayed solid through all of this — several members tell us their case has never moved faster — but retail alone doesn't set the board, and the board has clearly decided the July story is over.
One cooperative manager we spoke with this week put it plainly: "We're not producing less. If anything we're turning away milk. The board just decided it wasn't going to pay for July's story anymore." That tension — steady-to-strong retail against a board that's unwound its whole rally in three weeks — is the thing to watch through August.
What this means for your case
If you sell into wholesale accounts on an index-linked contract, expect your next invoice to look different from your last one, in either direction depending on when your contract resets. If you sell direct — farm stand, farmers' market, your own retail counter — the board swing matters less to you day to day, but it still matters to your supply costs if you buy any wholesale curd or aged wheels to round out your case, and it shapes what your buyers think a fair wholesale price looks like even when they're wrong about why the number moved.
The safest move right now is the boring one: don't reprice your own shelf off a single week's board number. A board that has swung more than a dollar in three weeks is not giving you a signal about what a pound of your cheese is worth to your customer — it's giving you a signal about what a federal purchase program and a stalled restaurant reopening did to a commodity index. Those are two different questions, and members who conflate them tend to either underprice a strong retail case out of nervousness or chase a wholesale index that has nothing to do with their actual costs.
Our Pricing & Margin for Specialty Cheese course walks through separating the two, building a cost floor that doesn't move every time a federal contract shifts, and reading the board as one input among several rather than the whole answer. It's a good week to take it, and Wednesday's post walks through exactly that.
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.