CME Cheese Price Plummets; Analysts Expect More Volatility
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Volume 34 November 14, 2014 Number 43 Scan this code for breaking CME cheese price plummets; news and the latest markets! analysts expect more volatility By Alyssa Mitchell Cheddar barrels also showed long as holiday orders move certainly an important factor INSIDE weakness in mid-October, fall- closer to being fi lled,” Dairy (in our price), and perhaps MADISON, Wis. — Cheddar ing as low as $1.9225 per pound Market News says. “Buyers we should look at them as a prices at the Chicago Mer- Oct. 24, but also recovered a bit have been adding to inven- dominating factor. However, ✦ Guest column: cantile Exchange (CME) to reach $2.16 Nov. 5. tories lately, but recent CME while what was happening in ‘Growth opportunities plummeted Tuesday, a move However, both blocks and activity refl ects sellers with the U.S. managed to trump the for the U.S. dairy industry.’ long-anticipated by dairy mar- barrels had steep declines extra blocks and barrels fi nd- gap between U.S. and world For details, see page 4. ket analysts who have been this week, falling 18 cents and ing less buyer interest than prices for some time, clearly a scratching their heads at the 17.25 cents, respectively, on expected. The weaker buyer day of reckoning was going to ✦ Cheese contest info long-term gap between U.S. Tuesday, and falling further to interest has surprised some come,” he says. now available online. and global prices. settle at $1.9425 and $1.9150, cheese sellers.” Novakovic notes that CME For details, see page 5. “The question is not so respectively, as of Friday. However, continued vola- futures indicate further price much ‘why now’ — it’s why did “The severity of the drop was tility is expected in the mar- weakness ahead for both butter ✦ Retail WATCH Exclusive: cheese shoot up to $2.20 again a little more than I anticipated, ketplace as lower prices may and cheese. Italian heritage, focus in the last month?” says Mike but the fact that it came down bring more buyers back to the Class III and Class IV milk on quality products set McCully, owner of The McCully was not surprising,” says Bill table, resulting in another price futures on Wednesday showed Lioni Latticini apart. Group LLC, Chicago. Brooks, dairy economist with bump, Brooks says. prices for Class III falling from For details, see page 7. CME Cheddar blocks fell FCStone, Chicago. “It’s a sideways market right $21.64 per hundredweight 21.25 cents Oct. 23 to $2.1575 Sara Dorland, managing now,” he says. “I don’t think this this month to $16.60 per hun- ✦ Vanic to retire; Zagzebski to per pound from $2.37, but in partner with Ceres Dairy Risk is the beginning of a straight dredweight by April of next succeed him at Great Lakes. the following weeks managed Management LLC, Seattle, downward trend yet.” year, and Class IV, at $17.60 in For details, see page 12. to rally back to $2.20 by Nov. 6. notes that while no one is fond McCully agrees that cheese November, falling to $16.19 by of a large drop like that seen on is likely to be well-supported December and into the $15.00s Tuesday, long, agonizing move- through December. early next year. ment down over several weeks “I think it will be near $2, Novakovic notes butter still Agropur announces $55 million keeps buyers cautious. give or take a dime,” he says. stands approximately $1 above “A drop like this gets things Andrew Novakovic, E.V. international prices. expansion in Weyauwega, Wis. moving, and we may see some Baker Professor of Agricul- CME butter dipped below buying pick up now,” she says. tural Economics at the Charles $2 per pound this week, set- LONGUEUIL, Quebec — Agropur Inc. is investing more than USDA’s Dairy Market News H. Dyson School of Applied tling at $1.9875 per pound as $55 million in its Weyauwega, Wis., facility to increase its Feta cheese notes some Midwest cheese Economics and Management of Friday. Butter previously production capacity. plants are operating near at Cornell University, notes had fallen below $2 at the end “There is a lot of tradition, skill and work ethic among our employees, capacity and also are fortify- that tight U.S. supplies and a of October, settling as low as and we are recognized in the market for having high-quality products,” ing vats with nonfat dry milk lack of imports due to various $1.77 Oct. 28, but bumped up says Doug Simon, president, USA Cheese Business Unit, Agropur. “We are (NDM). global fundamentals helped to over $2 last week before the a leader in Feta cheese production, and this will allow us to maintain “This has resulted in a situa- support U.S. cheese and butter declines seen this week. that leadership position. We are very excited about this investment and tion where increasingly cheese prices this year. McCully notes that some in the future of the Wisconsin dairy industry as it provides employment supplies are being viewed as “International markets are Turn to PRICES, page 14 a opportunities and a stable home for milk produced in the area.” Agropur CEO Robert Coallier adds that the investment “truly shows how committed we are to establishing our leadership in the U.S. market and to the future of the Wisconsin dairy industry.” The expansion, now underway, is to be completed in 2016. It is Judge dismisses consumer GMO labeling expected to create about 22 new jobs. measures fail in “I congratulate Agropur and applaud them for deciding to embark on lawsuit against Darigold Inc. Colorado, Oregon this major expansion in Wisconsin,” says Wisconsin Gov. Scott Walker. By Alyssa Mitchell “Not only is Wisconsin the top cheese-producing state in the country, By Emily King but the state has an international reputation for quality dairy products. SEATTLE — A federal judge has dismissed a lawsuit that accused The expansion will help to further that reputation.” WASHINGTON — Colorado Northwest dairy cooperative Darigold Inc./Northwest Dairy As- To help ensure that the Canadian company expanded in Wisconsin, and Oregon rejected ballot sociation of misleading consumers about its treatment of cattle the Wisconsin Economic Development Corp. (WEDC) is providing initiatives requiring the and employees. Agropur with $1.65 million in Economic Development Tax Credits over labeling of foods produced Earlier this year, plaintiffs Yesenia Ruiz and Fernanda Dorantes the next few years. In order to receive the full credits, Agropur must from genetically modifi ed fi led a complaint against Darigold alleging that the company’s retain its existing 146 jobs at the facility, create 22 new jobs and invest organisms (GMOs) during Corporate Social Responsibility Report (CSR) casts its treatment at least $55 million in capital investment. the 2014 election. Mean- of workers and cows in a positive light when they are mistreated, “WEDC is pleased to be able to assist Agropur in strengthening its while, Maui County, Hawaii, plaintiffs say. already strong position in the dairy industry and cheese production,” says approved a temporary ban The plaintiffs allege that Darigold misrepresented the condi- Reed Hall, secretary and CEO, WEDC. “Wisconsin produces so much cheese on GMO crop cultivation tions under which its products were produced and that the plain- that if the state was a country, it would rank fourth in the world in total and Humboldt County, Calif., tiffs relied on false assurances of ethical treatment for cows and cheese production behind the United States, Germany and France.” CMN Turn to DARIGOLD, page 14 a Turn to GMO, page 15 a © 2014 CHEESE MARKET NEWS® — This is Cheese Market News’ E-subscription and may not be forwarded to anyone other than the intended paid subscriber without the express permission of Cheese Market News (For more information, contact [email protected]) 2 CHEESE MARKET NEWS® — November 14, 2014 MARKET INDICATORS Chicago Mercantile Exchange CHEESE FUTURES* for the week ending November 13, 2014 Cash prices for the week ended November 14, 2014 (Listings for each day by month, settling price and open interest) Monday Tuesday Wednesday Thursday Friday Nov. 10 Nov. 11 Nov. 12 Nov. 13 Nov. 14 Fri., Nov. 7 Mon., Nov. 10 Tues., Nov. 11 Wed., Nov. 12 Thurs., Nov. 13 NOV14 2.149 2,204 2.141 2,205 2.129 2,200 2.123 2,200 2.120 2,203 Cheese Barrels DEC14 1.905 2,550 1.890 2,578 1.855 2,583 1.872 2,625 1.855 2,632 Price $2.1200 $1.9475 $1.9375 $1.9150 $1.9150 JAN15 1.770 2,345 1.769 2,386 1.760 2,467 1.762 2,524 1.760 2,540 2,455 Change -1 -2 1/4 NC FEB15 1.722 2,288 1.724 2,321 1.708 2,379 1.710 2,432 1.715 NC -17 1/4 MAR15 1.720 2,296 1.730 2,333 1.721 2,360 1.720 2,408 1.720 2,450 Cheese 40-lb. block APR15 1.725 1,949 1.729 1,991 1.726 2,042 1.725 2,077 1.730 2,112 MAY15 1.725 1,799 1.721 1,841 1.715 1,894 1.720 1,935 1.718 1,967 Price $2.1800 $2.0000 $1.9900 $1.9425 $1.9425 JUN15 1.727 1,847 1.720 1,897 1.714 1,945 1.715 1,984 1.711 2,002 Change -2 -18 -1 -4 3/4 NC JUL15 1.736 1,339 1.729 1,410 1.730 1,438 1.730 1,489 1.725 1,499 AUG15 1.770 1,207 1.765 1,248 1.764 1,286 1.764 1,309 1.758 1,330 Weekly average (Nov.