US cheese price climbs despite continuing 'historic' stock highs


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Related tags Milk protein Milk Butter

US cheese price climbs despite continuing 'historic' stock highs
Despite US cheese inventories remaining "above historic levels", cheese prices, and as a result milk protein prices, increased in August. But why?'s US dairy commodities expert and MilkPrice blogger, John Geuss, explains.

The August Class and Components prices were announced on September 5. The Class III milk price was $17.91 per hundredweight (cwt), a 3% improvement over the prior month.  

The butterfat price dropped to $1.51 per pound (lb), down six cents from the prior month.

Milk protein however advanced 8% to $3.48 per lb based on an improved cheese price and a weaker butter price. The increase in the price of cheese was surprising as cheese inventories remain well above historic levels.

The three components that make up the Class III price are returning to the expected relationship of milk fat around $1.50 per lb, milk protein near $3.50 per lb, and the new norm for other solids of around $0.50 per lb.

Graph 2

In terms of the relative value of each component, milk protein hit an all-time high making up 58% of the milk check.  

Of the $17.91 per cwt Class III price, milk protein contributed $10.40 based on the US Department of Agriculture (USDA) standards of 3% protein, 3.5% fat, and 5.7% other solids.

Graph 3

The remainder of this post will concentrate on factors that influence the price of cheese, which has a major impact on the Class III price.

The relationship between the USDA National Agricultural Statistics Service (NASS) wholesale price of cheese and the Class III milk price is shown below.

Graph 4

For more details relating to the August US dairy pricing and a special analysis on the impact of US cheese exports, see the current post on U.S. milk pricing​. 

US-based John Geuss is the editor of US dairy commodities blog, MilkPrice.

john g 2
US dairy commodities blogger, John Geuss.

For more of John's in-depth month-to-month dairy commodity price updates, click here.

For the second part of this month's US Commodities Corner update, 'Who does the US pricing system protect?', visit later this week.

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