Volume 31 February 25, 2011 Number 5 INSIDE Rising cheese prices can be ✦ Total butter, cheese stocks up from December. challenge for pizza business For details, see page 3. By Alyssa Sowerwine of foodservice at FCStone/ would take the first half of the past years,” Cropp says. “The ✦ Guest column: Downes-O’Neill. “Prices aren’t year to slow down the growth net result is that it appears ‘Taking policy changes MADISON, Wis. — To the exactly where we expected in milk production as dairy pro- that buyers are anticipating to Capitol Hill without surprise of many, cheese prices them to be, especially for this ducers slowly adjust cow num- considerably tighter supplies consensus is unacceptable.’ have seen steady increases over time of year.” bers and milk per cow slows in of milk and dairy products for For details, see page 4. the past several weeks at the USDA’s Dairy Market News response to much higher feed the immediate months ahead Chicago Mercantile Exchange notes that cheese inventories prices,” he says. “But it now and have been aggressive in ✦ Study finds actual sodium (CME). While this is welcome remain above historic levels. looks like the opposite will bidding up prices.” may vary from what is on news to some in the dairy indus- Cheddar block prices at occur with prices averaging Dairy Market News notes manufacturers’ labels. try, it presents some challenges the CME have increased from higher for the first half of the that Mozzarella interest re- For details, see page 12. for pizza makers. $1.3425 per pound at the begin- year than the second half, and mains solid, as pizza makers re- “Coming into the year, I ning of January to $1.9550 as of with averages for the year much supply for the typically stronger ✦ January milk production up think it’s safe to say that the Feb. 18, while barrels jumped improved over 2010.” NCAA basketball tournament 2.3 percent from year ago. overall outlook in the dairy from $1.3400 to $1.9175 in the Cropp notes the run-up in demand. For details, see page 31. industry was bearish,” says same time period. prices is partially explained “Pizza companies kind of Rob Chesler, vice president Prices continued to increase by several factors. While milk get the double whammy when this week. On Tuesday, Cheddar production is still running well it comes to cheese prices,” blocks climbed another 2.75 above year-ago levels, some as- Chesler says. “The high demand cents, and then another fourth sume that sharply higher corn, for Mozzarella has driven prices Pizza industry using greater of a cent on Wednesday to settle soybean and hay prices will up, and pizza demand certainly at $1.9850, where the price soon curtail milk production. has helped to fuel that. At the variety, volumes of cheese remained Thursday. Second, while fluid milk same time, about 35-50 percent Cheddar barrels also in- sales have not shown growth, of pizza companies’ input costs By Johanna Nelson creased by 2.75 cents on butter and cheese sales have are from cheese.” Tuesday to $1.9450 per pound. been quite favorable despite Chesler adds that adding MADISON, Wis. — The pizza industry has proven to be a bright spot Barrels saw a slight decrease on higher prices, he says. in wheat costs and energy for cheese companies struggling through difficult economic times. Wednesday to $1.9400 but again In addition, Australia and costs for moving product can And it’s not just producers of cheeses such as Mozzarella that benefit rose by a cent on Thursday to New Zealand, which account put a financial strain on pizza — pizzerias throughout the country are incorporating a variety of settle at $1.9500. for about 40 percent of world operators. “non-traditional” pizza cheeses into their pies. This price pattern is the op- dairy trade, have scaled back He notes that pizza opera- “The pizza industry is a huge source of revenue,” says Dean Som- posite of what was forecasted anticipated milk production for tors often buy cheese in a “cents mer, cheese and food technologist for the Wisconsin Center for Dairy back in January, notes Bob the year due to adverse weather plus” arrangement, negotiating Research (CDR), Madison, Wis. “It is critical for the cheese industry, Cropp, professor emeritus at that has impacted pasture prices based on the CME block and has been for many years.” the University of Wisconsin conditions, he adds. price. According to Jim Montel, executive vice president, strategic initia- Cooperative Extension in his “Improvement in the world Chesler says that typically tives, Dairy Management Inc. (DMI), 25 percent of U.S. cheese produced latest “Dairy Situation and economy also has increased he recommends pizza opera- is used by the pizza industry. Outlook” report. the demand for dairy products, tors lock in a price for about half As a key player in the cheese industry’s economic wellbeing, DMI “It was then assumed that it and at higher prices than in Turn to PRICES, page 32 formed a partnership with Domino’s Pizza in 2009 to address a decline of cheese consumption on pizzas. The partnership that began with Domino’s American Legends line of specialty pizzas has since helped the industry regain momentum. “Research as well as what pizza chains would tell you is that they Menu regulations put some Sensory analysis lost a focus on pizza and started selling sandwiches, salads, desserts helps make good and pasta,” Montel says. “And then with the escalation of commodity pizza chains in unique spot cheese matches costs, many of them tried to deal with rising costs by taking cheese off By Alyssa Sowerwine pizzas or reducing the quality.” By Rena Archwamety As a result, he says consumers moved into other categories to meet their in-restaurant eating needs. MADISON, Wis. — The food industry is gearing up for the an- ticipated release of draft regulations from FDA on national menu MADISON, Wis. — In When the pizza cheese issue came on the radar screen, DMI selected between the process of mak- Domino’s Pizza as a key partner driver to help reinvigorate the sector labeling provisions, but some companies feel the regulations should not take a “one size fits all” approach. ing cheese and selling the and sell more pizza and pizza cheese. finished product, sensory To help realize this objective, Montel says three key drivers in the pizza FDA in August 2010 first announced the availability of a draft guidance for the industry that included questions and answers analysis is a helpful research category were assessed — value, product quality and advertising. and development tool that “We try to push all three buttons,” Montel says. regarding implementation of menu labeling regulations included in the Patient Protection and Affordable Care Act of 2010. can fine tune the cheese to American Legends pizzas feature high-end ingredients. The cheese best match its end use. content depends on variety, but typically they have about 40 percent The regulations would require chain restaurants, similar retail food establishments and vending machines with 20 or Sensory analysis covers more cheese than a regular pizza. a broad range of attributes, The line features eight specialty pizzas, including the newest more locations to provide specific nutrition labeling information. Those restaurants must post calories on menus, menu boards from simple observations of Turn to VARIETY, page 26 Turn to MENU, page 25 Turn to SENSORY, page 28 Reprinted with permission from the Feb. 25, 2011, edition of CHEESE MARKET NEWS® © Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com 2 CHEESE MARKET NEWS® — February 25, 2011 MARKET INDICATORS Chicago Mercantile Exchange CHEESE FUTURES for the week ended February 24, 2011 Cash prices for the week ended February 25, 2011 (Listings for each day by month, settling price and open interest) Monday Tuesday Wednesday Thursday Friday Fri., Feb. 18 Mon., Feb. 21 Tues., Feb. 22 Wed., Feb. 23 Thurs., Feb. 24 Feb. 21 Feb. 22 Feb. 23 Feb. 24 Feb. 25 FEB11 1.736 371 1.736 371 1.736 371 1.736 371 Cheese Barrels MAR11 1.861 310 1.880 306 1.880 306 1.880 312 Price $1.9450 $1.9400 $1.9500 $1.9500 APR11 1.770 217 1.770 217 1.725 219 1.668 243 MAY11 1.752 142 1.752 142 1.705 143 1.644 152 Change Market +1 +2 3/4 -1/2 NC JUN11 1.720 138 Market closed 1.720 138 1.694 138 1.649 152 Closed JUL11 1.707 95 1.717 97 1.717 97 1.662 91 Cheese 40-lb. block AUG11 1.720 92 1.720 92 1.725 93 1.702 96 Price $1.9825 $1.9850 $1.9850 $1.9875 SEP11 1.730 92 1.720 98 1.720 98 1.718 98 Change +2 3/4 +1/4 NC +1/4 OCT11 1.715 149 1.705 150 1.705 150 1.705 150 NOV11 1.680 171 1.685 173 1.685 173 1.685 173 Weekly average (Feb. 22-25): Barrels: $1.9463(+.0398); 40-lb. Blocks: $1.9850(+.0415). DEC11 1.680 175 1.680 177 1.680 177 1.680 177 Weekly ave. one year ago (Feb. 22-26, 2010): Barrels: $1.3290; 40-lb. Blocks: $1.3690. Total Contracts Traded/ Open Interest 40/1,952 17/1,961 7/1,965 139/2,015 Extra Grade NDM Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com. Price $1.8000 $1.8000 $1.8000 $1.8000 Change Market NC NC NC NC Closed Grade A NDM for the week ended February 24, 2011 Price $1.8325 $1.8325 $1.8325 $1.8325 DRY WHEY FUTURES (Listings for each day by month, settling price and open interest) Change +1/4 NC NC NC Fri., Feb.