MD_DA830                                                         
DA                                                               
MD DA830 Cheese - Midwest                                        

MADISON, WI.  February 08, 2012 (REPORT 6)                       

MIDWEST CHEESE:                                                  
                                                                 
Weakness prevails in cheese markets.  This is widely believed to be a factor 
of increased milk supplies during an unusually mild winter in many areas, 
weaker retail sales, and low export interest.  Cheese price weakness is 
illustrated by considering last week's CME average for blocks, $1.4965, 
being $0.2820 below the same week in 2011 and $0.066 below the close of 
2011.  For barrels, last week's average, $1.4925, is $.2485 below week 5 of 
last year and $.0775 below week 52 of 2011.  By this Wednesday's CME close, 
both blocks and barrels were $1.4750, with barrels down $0.0200 this week so 
far and blocks down $0.0100.  Many cheese manufacturers report strong milk 
supply availability, at discount prices well under Class prices.  In some 
cases, milk is so readily available at a favorable price that cheese for 
inventory building and aging programs is being manufactured to ease capacity 
demands on powder plants by firms which both manufacture cheese and operate 
drying operations.  With slower retail ordering, cheese inventories are 
building.  Some retail ordering is believed to have been delayed by 
prospective buyers who have decided to step back in expectation of some 
further price weakness.  Government procurement orders for cheese barrels 
continue to keep some manufacturers of cheese barrels busy.  Pepper Jack 
sales continue to be cited as particularly strong among the varieties of 
cheese.  The demand is believed to be fueled by featured sandwiches in 
various chains of sub sandwich stores.  Other manufacturers cite 
particularly strong sales of hard Italian varieties such as Asiago and 
Parmesan.  There is little current reported cheese export interest.  One 
source characterized export interest as being in the doldrums.  NASS reports 
that total national cheese output for December 2011 was 929 million pounds, 
2.4% above December 2010 and 4.2% above November 2011.  Total Central region 
cheese production in December 2011, 409.3 million pounds, was 44% of the 
national total.  Central region December 2011 total cheese production and 
percentage of the total for the six separately listed Central states, in 
descending volume, includes Wisconsin, 230.2 million pounds, 65.9%; 
Minnesota, 52.1 million pounds, 14.9%; South Dakota, 23.4 million pounds, 
6.7%; Iowa, 22.3 million pounds, 6.4%; Ohio, 16.3 million pounds, 4.7%; and 
Illinois, 5.0 million pounds, 1.4%.  Wisconsin wholesale prices for Grade A 
Swiss Cuts adjusted down following the decrease in the Class III price 
announced last Friday when January Class and Component Prices were released.  
Process cheese adjusted up slightly following last week's CME weekly average 
increase for barrels and down for the remaining varieties driven by the 
decline in blocks.

WISCONSIN WHOLESALE SELLING PRICES:  DELIVERED,                  
DOLLARS PER POUND (1000 - 5000 POUNDS MIXED LOTS)                
                                                                 
Process American 5# Loaf                   : 1.8525-2.3600       
Brick And/Or Muenster 5#                   : 2.0025-2.4400       
Cheddar 40# Block                          : 2.0025-2.8650       
Monterey Jack 10#                          : 1.9725-2.8650       
Blue 5#                                    : 2.2675-3.1300       
Mozzarella 5 - 6# (Low Moisture, Part Skim): 1.8475-2.9650       
Grade A Swiss Cuts 6 - 9#                  : 3.0125-3.3300      
1:00 eric.graf@usda.gov