Current Class III milk prices have fallen as high butterfat prices and low protein prices have evolved (Click here for details). This post will review the trends in pricing of cheese and butter used to price Class III milk.
CHEESE
Chart I below covers the retail and wholesale prices of Cheddar cheese used to price milk protein. Retail prices have remained stable for over five years. In May 2024, the retail price was $5.37 per pound and over the five plus years in the chart below it averaged $5.57 per pound. Wholesale prices are only slightly different, with a May 2024 price of $1.87 and a five-year average of $1.83. Overall, prices of cheese at the retail and wholesale levels are very stable in spite of inflationary pressure.
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Chart I - Retail and Wholesale Prices of Cheddar Cheese |
Wholesale prices are significantly influenced by wholesale inventory levels. Chart II shows that a very consistent wholesale supply of American cheese, which is mostly Cheddar cheese. With the exception of the COVID period, days' supply of inventory has remained very consistent. The five plus years average is 56 million pounds and the current supply is also 56 million pounds
By using the days' supply of inventory as a measurement, both production, removal from inventory, and inventory levels are used to calculate a supply level that should be stable. The 12-month moving averages are used to be consistent with butter days' supply covered below which has a very volatile annual pattern.
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Chart II - Wholesale Days' Supply of American Cheese |
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Chart III - Retail and Wholesale price prices |
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Chart IV - Wholesale Days' Supply of Butter |
The growth over the span for the period in Chart V shows a growth in inventory of 9%, close to the growth in retail sales and production.
The inventory levels do not show tightened supplies that would increase butter prices.
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Chart V - Total Wholesale Butter Inventories |