Thursday, March 4, 2010

Who done it?

Only recently, pundits were saying the price of cheese would not go below $1.50. Today,blocks slipped further (down 1.5 cents) and barrels slipped even more ( down 3.25 cents) on the Chicago Mercantile Exchange (CME).

For those who are wondering, the main seller has been the same as last year - Jerome Cheese. Kraft has become quite active as a seller of barrels.

There are stories circulating as to why Kraft is dumping cheese. I find them unconvincing. No one goes to the CME to buy and sell dairy products, there are plenty of brokers who can take care of that. Players go to the CME to set price - which is going down.

Interestingly, Kroger (supermarkets) has been buying barrel cheese. While Kroger has processing facilities, they do not include cheese processing. In Kroger's last SEC filing, Kroger complains about lack of profitability and specifically mentions, dairy deflation hurting profits. That is, retail prices had been falling in the third quarter of 2009. Who knows what Kroger is doing buying barrel cheese on the CME, but, it is obvious from the positions they are taking on the spot market, Kroger is helping to drive down price.

Daisy Brands drove down NFDM today. Daisy Brands produces Sour Cream and Cottage Cheese. According to the Code of Federal Regulations (21CFR) Sec. 131.160 Sour cream and Sec. 133.128 Cottage cheese, neither product uses NFDM.

There is an ancient Chinese expression, "The beginning of wisdom is to call things by their real names." The CME is not a market and the games played there are not fun.


  1. John, Thank you for naming names. I have a what they are doing illegal or unethical?

    If it is illegal, then why doesn't the government stop them? If it is unethical the farmers need to push legislature to create new laws to close the loopholes and stop the giants from crushing the farmers.

  2. "While Kroger has processing facilities, they do not include cheese processing."

    From Kroger's website: In addition the Company operates two cheese plants, which process a variety of natural and processed cheeses for supermarkets.

    Kroger buys barrel cheese for processing at Pace Dairy Foods.

    Pace Dairy of Indiana
    Crawfordsville, IN

    Pace Dairy of Minnesota
    Rochester, MN

  3. As long as market can be controlled by a Kraft or someone similar we will be working for them for what they want to pay us. If nothing changes it will continue until the industry is ruined. I for one will not survive this much longer. I've been dairyman whole life and will end up with nothing to show for it. Until the day the grocery shelves are stocked from china, America does not care!! It has been quite a ride!

  4. All the sellers and buyers appear to be milk buyers. Nothing suspicious there right? Criminals helping criminals.

  5. I am not old enough to remember the trying times in the 80's. (herd buyouts) however i did grow up listeining to a great album my mom would play all the time. i can remember thinking, man that must have been terrible. whats the song you ask? Scarecrow by good old John -the coug- Mellencamp. say what you want about him, but that song has a line that is hard not to think of: HE said John its just my job and I hope you understand. Why calling it your job old man sure dont make it right, if you want me to, il say a prayer for your soul tonight -
    It referenced the bank foreclosures. the longer this keeps going, unfortunately many more hard working farmers are going to be hearing those words.

    who do you pray for? the man loosing everything or the greedy suits sitting at a desk that could care less about you?

    Jake Jones, PA

  6. Nice sentiment Jake. My opinion is you have to pray twice as much for the suits because God already has his eyes on the ones suffering the most.

  7. The problem is that the government doesn't want to stop the illegal or unethical period. We can't rely on the government to do the right thing anymore. Anyone ready to strike yet?

  8. I've never thought that would be the right way to go about it, but the longer this goes on the more I think it may be the only way to get the attention we need and to let them know we are serious. It has been said before there won't be a problem until Susie Consumer goes to the store and there is no milk,meat, eggs, or veggies. The outcry from the public will then be loud enough that the problem will be addressed. Until that time we will continue to be paid with lipservice and that just isn't paying the bills.DWCovert