Friday, October 15, 2010

Blocks Fall



(click on image to enlarge)

Block Cheddar fell today on the CME, three cents. The last time blocks fell was on June 28, 2010. Since then, blocks have risen $0.3725. The seller today appears to be Jerome Cheese. Jerome was also the seller on June 28th and since June 29th has not been active on the CME.

I spoke with someone today who said cheese is too high - there is a lot of cheese in inventory. I then asked if farm milk was too high and the answer was no.

As can be seen in the above graph, the fact that blocks drop for the processors, in no way means consumers will get great deals and use more cheese. If farm milk price drops, processors will just make more cheese from cheap milk. Comparing August 2010 cheese stocks with January 2009, shows a 17% increase in inventory - all produced with cheap milk.

There is no way that wholesale and farm milk price can be tied together and still pretend there is a market.

2 comments:

  1. Other than to get back to manipulating the market again what possible reason would Jerome have to be selling at the CME?

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  2. In the last seven days there have been a total of seventeen loads of blocks ( a fraction of production) sold on the CME. The effect that has on the California cheese pay price to farmers just in that one week is just under a dollar a cwt.

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