MONROE - Pile the cheese a little bit higher on the pizzas, please, because cheese prices are down.
That's good news for consumers, but not so good for dairy farmers and cheesemakers.
More than 1 billion pounds of cheese is being stored in warehouses around the country, according to the USDA March Cold Storage report released April 22.
According to the report, 9 percent more cheese was in storage on March 31 than a year ago.
Green County's UW-Extension Agriculture Agent Mark Mayer said the excess is sending the price of cheese down.
"(Commodity) traders look at that (stockpile) and, supply and demand, expect prices to go down," he said.
The strengthening of the U.S. dollar against the euro is also slowing exports, he said.
Lower cheese prices are also the result of a combination of several other variables, including the world economy, increasing dairy herds (after a 2009 decrease), higher milk yields per cow and fewer consumers eating out.
Mayer calls it "the perfect storm" - good for consumers, but not for producers, he said.
Most of Wisconsin's milk goes into making cheese.
Wisconsin's milk production in 2009 went up 6 percent compared to only 0.6 percent in the country, even as dairy herds were being whittled down.
But the forecast for increasing milk prices is not what it was at the beginning of the year.
Mayer said the milk forecast in January was for $17 per cwt (hundred weight).
"We're not getting that high," he said.
Class III milk futures are now expected to remain below $13 until June, and only peak at $15.23 for September.
The price for Class III milk - which goes into making milk - follows cheese prices, Mayer said.
"For every penny change in cheese prices, there's a 10 cent change in the milk price," he said.
When the price of cheese is at $1.43 per pound, milk is about $14.30 per cwt.
Cheddar blocks, at $1.48 per pound in early January, were down to $1.27 in mid-March.
Milk prices have improved since last year.
Milk was $12.20 per cwt in March 2009 and $14.70 per cwt in March 2010.
In the second half of 2009, Class III milk price improved for dairy farmers, from $9.97 in June and July to $14.98 in December.
Bob Cropp, Professor Emeritus at the University of Wisconsin Cooperative Extension in Madison, explained In his March 18 Dairy Situation and Outlook report that after the holidays, "cheese prices frequently decline ... lowering the Class III price."
But 2010 cheese prices are declining more than expected, and taking the milk price with it.
Ron Buholzer at Klondike Cheese, Monroe, said the market is giving mixed signals.
"It was starting to move up, and then all of the sudden it goes the other way," he said. "There's no clear signal. I don't know how anyone can make an intelligent decision."
Klondike Cheese doesn't make a cheese that is stored and aged, but does gear its production to sales.
"We will try the best we can to adjust our milk intake to meet our demand," Buholzer said.
He said shipments of commercial cheeses going to restaurants is still slow, but the amount of products that can be sold either to commercial or to retail, such as deli supermarkets, is holding steady or even increasing.
"The retail end, that is stronger than it was," Buholzer said. "People don't quit eating, but they have shifting patterns. They're still not running back to restaurants."
According to the USDA Livestock, Dairy & Poultry Outlook, released April 21, "higher commercial domestic use should draw down currently high cheese stocks over the course of the year and firm cheese prices by year's end."
The USDA expects 2010 prices to be higher than 2009 but not to 2007 or 2008 levels. Class III milk prices are expected to average $14.10 to $14.60 per cwt and cheese prices, to average $1.49 to $1.54 per pound this year.
Mark Mayer said dairy farmers need $15.50 to $16 milk to break even.
USDA statistics show net farm income in 2009 fell 35 percent from 2008.
Butter prices at $1.33 per pound in January were expected to decline, but rose 14 cents per pound by mid-March.
The USDA reported, butter stocks in cold storage were down 7 percent from a year ago.
Butter and dry whey prices have been supported by increased exports.
That's good news for consumers, but not so good for dairy farmers and cheesemakers.
More than 1 billion pounds of cheese is being stored in warehouses around the country, according to the USDA March Cold Storage report released April 22.
According to the report, 9 percent more cheese was in storage on March 31 than a year ago.
Green County's UW-Extension Agriculture Agent Mark Mayer said the excess is sending the price of cheese down.
"(Commodity) traders look at that (stockpile) and, supply and demand, expect prices to go down," he said.
The strengthening of the U.S. dollar against the euro is also slowing exports, he said.
Lower cheese prices are also the result of a combination of several other variables, including the world economy, increasing dairy herds (after a 2009 decrease), higher milk yields per cow and fewer consumers eating out.
Mayer calls it "the perfect storm" - good for consumers, but not for producers, he said.
Most of Wisconsin's milk goes into making cheese.
Wisconsin's milk production in 2009 went up 6 percent compared to only 0.6 percent in the country, even as dairy herds were being whittled down.
But the forecast for increasing milk prices is not what it was at the beginning of the year.
Mayer said the milk forecast in January was for $17 per cwt (hundred weight).
"We're not getting that high," he said.
Class III milk futures are now expected to remain below $13 until June, and only peak at $15.23 for September.
The price for Class III milk - which goes into making milk - follows cheese prices, Mayer said.
"For every penny change in cheese prices, there's a 10 cent change in the milk price," he said.
When the price of cheese is at $1.43 per pound, milk is about $14.30 per cwt.
Cheddar blocks, at $1.48 per pound in early January, were down to $1.27 in mid-March.
Milk prices have improved since last year.
Milk was $12.20 per cwt in March 2009 and $14.70 per cwt in March 2010.
In the second half of 2009, Class III milk price improved for dairy farmers, from $9.97 in June and July to $14.98 in December.
Bob Cropp, Professor Emeritus at the University of Wisconsin Cooperative Extension in Madison, explained In his March 18 Dairy Situation and Outlook report that after the holidays, "cheese prices frequently decline ... lowering the Class III price."
But 2010 cheese prices are declining more than expected, and taking the milk price with it.
Ron Buholzer at Klondike Cheese, Monroe, said the market is giving mixed signals.
"It was starting to move up, and then all of the sudden it goes the other way," he said. "There's no clear signal. I don't know how anyone can make an intelligent decision."
Klondike Cheese doesn't make a cheese that is stored and aged, but does gear its production to sales.
"We will try the best we can to adjust our milk intake to meet our demand," Buholzer said.
He said shipments of commercial cheeses going to restaurants is still slow, but the amount of products that can be sold either to commercial or to retail, such as deli supermarkets, is holding steady or even increasing.
"The retail end, that is stronger than it was," Buholzer said. "People don't quit eating, but they have shifting patterns. They're still not running back to restaurants."
According to the USDA Livestock, Dairy & Poultry Outlook, released April 21, "higher commercial domestic use should draw down currently high cheese stocks over the course of the year and firm cheese prices by year's end."
The USDA expects 2010 prices to be higher than 2009 but not to 2007 or 2008 levels. Class III milk prices are expected to average $14.10 to $14.60 per cwt and cheese prices, to average $1.49 to $1.54 per pound this year.
Mark Mayer said dairy farmers need $15.50 to $16 milk to break even.
USDA statistics show net farm income in 2009 fell 35 percent from 2008.
Butter prices at $1.33 per pound in January were expected to decline, but rose 14 cents per pound by mid-March.
The USDA reported, butter stocks in cold storage were down 7 percent from a year ago.
Butter and dry whey prices have been supported by increased exports.