A month ago, several producer members told us they expected 2020 to be a decent milk-price year — the first in a while. That conversation has changed. Class III futures, which were trading near $17.90 in late January, closed last week down close to two dollars. Class IV futures fell even further over the same stretch. The move happened fast, and it happened for a reason members are living through directly: restaurants and school cafeterias closed almost overnight, and food-service accounts are a meaningful share of the wholesale cheese market.
Retail is not offsetting the gap, at least not yet. A few of our specialty-retail members report strong walk-in and phone-order volume this month — people stocking pantries, buying in bigger blocks than usual — but a grocery case can only absorb so much of what a shuttered restaurant supply chain used to move. Some producers are already fielding calls from co-ops and processors about slowing intake. If you make or sell fluid milk into a wholesale channel and haven't had that conversation yet, it is worth having before your next delivery, not after.
What makes this stretch unusual isn't just that demand dropped — it's that it dropped unevenly and fast, in a product category that doesn't keep. Milk that would normally move through a school-lunch contract or a restaurant cheese board doesn't have a shelf to sit on while a supply chain reroutes itself. Processors are trying to shift line capacity toward retail-pack product instead of the bulk formats that food-service accounts buy, and that kind of changeover takes real time on a physical plant floor, not just a phone call. A few of our members who sell into both channels have told us their retail-pack orders are up at the same time their food-service orders are down to nearly nothing, and the two don't net out evenly because the packaging and the buyer relationships aren't interchangeable.
That mismatch is worth naming plainly, because it means "demand is fine on average" isn't a useful sentence for anyone actually running a make schedule or a delivery route this month. Average masks which channel you're in.
What this means behind the counter
For members on the retail and distribution side, the near-term risk isn't the price of a wheel — it's whether your usual order still clears at all. A few things we heard this week that are worth passing along:
- Confirm standing orders don't auto-cancel. More than one member has had a wholesale account go quiet without an actual cancellation call — the restaurant simply stopped answering. Chase those down rather than assuming the order still stands.
- Ask your distributor what their cold-chain capacity looks like. Several distribution members are absorbing product that was headed to food-service and need somewhere to put it; a retailer with case space to spare may find a better price than usual this week.
- Don't overcorrect on production. A few smaller producers are already talking about cutting make schedules. That's a real option, but it's also hard to reverse quickly if retail demand keeps holding. Talk to your buyers before you change your vat schedule.
- Revisit your pricing sheet before you revisit your recipe. A couple of members have asked about reformulating for a cheaper input cost. That's a bigger decision than it sounds like under time pressure — a pricing conversation with your existing buyers is usually faster to reverse than a recipe change.
We don't have a read yet on how long food-service demand stays down, and we're not going to guess at a number in this post. What we can tell members is that the federation is tracking wholesale and futures pricing week to week right now, and we'll flag anything that looks like it's stabilizing or getting worse. If your business is seeing something in your own order book that doesn't match what we've described here — either direction — tell us. We're hearing from members faster than any market report is publishing right now, and that matters more than usual this month.
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.