MD_DA840                                                         
DA                                                               
MD DA840 Cheese - West                                           

MADISON, WI.  July 08, 2009 (REPORT 27)                          

WEST CHEESE                                                      
                                                                 
Pricing levels for both barrel and block cheese have been steady at 
$1.1000 and $1.1150, respectively.  Buying activity is active at the 
CME with 11 cars of barrels sold and 27 cars of blocks sold last week.  
Production of cheese is steady to lower and often reflects declining 
milk receipts and lower solids in the milk.  Yields are seasonally low.  
Cheese demand is variable across varieties.  The major impact is what 
levels of stocks are being held in end users hands and their desire to 
restock or hold inventories.  Current pricing levels are staying at or 
slightly above support levels, boding that there is limited downside 
risk to prices.  End users have purchased and stored product at the low 
points of past price cycles.  The questions would be as to when the 
market will trend higher and how much coverage buyers have for later in 
the year needs.  Cheddar demand is fair with offerings available from 
most producers.  Sales activity is active for the retail sector and 
remains fair for food service accounts.  Barrels and block cheddar 
offerings are moderate to heavy in the region with surplus product 
offered on spot and exchange markets.  Swiss sales are often slower 
than projections.  Mozzarella interest is fair to good with featuring 
moving more cheese in the pizza sector.  On July 6, USDA announced 
initial 2009-10 DEIP allocations for the period of July 1, 2009, 
through June 30, 2010.  The 2008-2009 cheese allocations that remain 
uncommitted are 2,878 MT; this balance will be made available through 
the issuance of new Invitation for Offers.  According to USDA, NASS, 
total cheese production for the U.S. in May is 860.7 million pounds, up 
2.6% or 22.2 million pounds from last year.  Cumulative output for the 
first five months of the year is 4.17 billion pounds, up 1.3% or 54.3 
million pounds unadjusted.  May output for the Western region is 352.1 
million pounds, down 0.9% from last year.  Swiss output for May for the 
U.S. is 26.6 million pounds, down 1.9% from last year.

WHOLESALE SELLING PRICES:  DELIVERED, DOLLARS PER POUND          
(1000 - 5000 POUNDS MIXED LOTS)                                  
                                                                 
Process 5# Loaf                              : 1.2250-1.4825     
Cheddar 40# Block                            : 1.2475-1.6000     
Cheddar 10# Cuts                             : 1.4275-1.6475     
Monterey Jack 10#                            : 1.4375-1.5975     
Grade A Swiss Cuts 6 - 9#                    : 2.5900-3.0700     

1500CT Butch.Speth@ams.usda.gov 608.250.3202