Tuesday, January 19, 2010
(click on image to enlarge)
Dairy farm milk is priced by a handful of traders at the CME. If you are in a federal milk market order, many will counter with some meaningless gobbledegook about NASS.
In any event, the cheese traded on the CME is Cheddar. However, all class III, cheese milk, is priced from the CME regardless of yields and price.
More Mozzarella is made than Cheddar. If you take average farm milk, without any fortification, the yield for Cheddar will be 9.6 pounds per hundredweight. The yield for mozzarella will be 13 pounds per hundredweight.
Cheddar needs some minimum aging. Mozzarella requires no aging.
Anyone might logically think the wholesale price of Cheddar would be higher than the wholesale price of mozzarella. As the above charts indicate, mozzarella is a real moneymaker.
Further, the wholesale price of mozzarella dropped 12%, 2008 versus 2009. Farm milk dropped 35%.