Two numbers crossed our desk this week that don't sit comfortably together. Wholesale cheese, the daily-traded price that most cheese-milk contracts reference in one form or another, opened this week lower than it closed last month. At the same time, federal production data showed milk output setting a record for the fourth month running, with late-summer output up close to two percent over a year ago. More milk chasing a softer cheese price is not a new story in this industry, but it is worth walking through what it actually means heading into fall.
The short version: input costs have been comparatively kind this year, which is part of why herds have kept expanding output even as cheese prices soften. Feed has not repeated the spike some of you saw in late August, and cooler fall temperatures are already easing herd stress and nudging output higher in the Northeast, where more milk is showing up for spot purchase than buyers were expecting. That combination — a cheap-ish feed environment and easy fall cow comfort — is exactly what keeps supply climbing even into a softening price. It is good news for anyone buying milk, and mixed news for anyone whose revenue depends on the price it fetches.
Why this lands harder on small operations
A large processor with volume contracts and hedging in place can absorb a few cents of downward movement in wholesale cheese without much drama. A small farmstead creamery selling most of its output at or near spot, or a member paying a milk-price-indexed contract to a nearby producer, feels this move faster and with less cushion. Several members told us this month that they're watching their own margin line move in the wrong direction even though nothing about their operation changed — the input side held steady, but the price they're getting for finished wheels came in lighter than planned.
Federal price forecasters have already trimmed their own outlook for both cheese and butter for the rest of this year and into next, citing exactly this supply picture. That's not a prediction we're in a position to improve on, but it does mean members shouldn't assume this month's softness is a blip that reverses itself by the holidays. Plan your fall pricing and any wholesale commitments around the market you're actually seeing, not the one you were expecting in July.
What we're telling members to check this week
If you sell under a contract that resets or reprices monthly, get the actual new number before you commit inventory or labor against it — don't run last month's price forward out of habit. If margin coverage or a similar income-protection program is part of your operation, this is a reasonable week to look at whether your enrollment level still reflects where the gap between milk cost and cheese price is actually sitting, rather than where it sat when you signed up. And if you buy milk from another member rather than milking your own herd, ask what they're seeing on the supply side before you renew a standing price — the story upstream (more milk, easier fall conditions) is different from the story you're feeling on the case side (softer cheese pricing), and both sides of that agreement should be looking at the same picture.
None of this is a reason to panic. Milk supply cycles up and down every year, and a fourth consecutive month of record output is itself a sign that most producers are doing fine on the cost side. But for members already managing a hard year on the farmstead side, a softening cheese price on top of higher volume is the kind of quiet squeeze that's easy to miss until a quarter-end statement makes it obvious. We'd rather you see it now, on your own terms, than in a January reconciliation.
If you want a second set of eyes on what your own numbers are telling you, our Membership & Outreach Committee has been fielding these calls all month and can point you toward members in a similar position.
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.