MD_DA840                                                         
DA                                                               
MD DA840 Cheese - West                                           

MADISON, WI.  November 18, 2009 (REPORT 46)                      

WEST CHEESE 

Block cheese prices at the cash CME Group market continue to firm, 
while barrel prices are lagging 14 cents behind.  Many contacts believe 
that a spread this wide is unsustainable and that one or both markets 
will need to reverse direction some time in the not too distant future.  
The market, however, is telling the correct story according to 
participants as blocks are in a much tighter position than barrels. 
Block prices have either held steady or increased for the last 12 
trading sessions and have gained 7 1/2 cents during that period to 
close at $1.5825 at midweek, another yearly high.  Over the same 
period, barrel prices have declined 4 1/2 cents to close at $1.4425 at 
midweek.  Some operations have decided to move some additional milk 
into cheese production away from other uses and others have decided 
just the opposite and moved milk towards butter/powder.  Interest in 
aged cheese is begging to improve seasonally.  Swiss stocks are in very 
good shape for the season and mozzarella interest is better than some 
had anticipated.        

According to FAS, cheese and curd exports for the first nine months of 
the year total 170.6 million pounds, down 26% from the same period in 
2008.  This is a decrease in exports of 58.7 million pounds or a weekly 
average decline of 1.5 million pounds for the 39 weeks so far in 2009.  
The exports amount to 2.3% of total cheese production for the period.  
The top three export destinations, the amount shipped, and the change 
from last year are as follows:  Mexico 66.2 million pounds, +11%; South 
Korea 16.7 million pounds, -30%; and Canada 15.2 million pounds, -13%.  
These three countries amount to 58% of the exports for the nine month 
period.  

Also according to FAS, total quota imports of cheese for the first ten 
months of the year are 163.9 million pounds, up 13% from 2008.  This 
volume stands at 55% of the annual quota.  Imports of High-Tier cheese 
(above quota and with a penalty) for the ten months total 19.3 million 
pounds, which is equal to 70% of the volume for the same period last 
year.  Imports of Swiss cheese amount to 39.6 million pounds, about 
even with the volume for last year and 52% of the annual quota.  The 
top two countries for the imports are Finland and Norway and they 
account for 70% of the volume.                                                        
                                                                 
WHOLESALE SELLING PRICES:  DELIVERED, DOLLARS PER POUND          
(1000 - 5000 POUNDS MIXED LOTS)                                  
                                                                 
Process 5# Loaf                              : 1.6000-1.8575     
Cheddar 40# Block                            : 1.7050-2.0575     
Cheddar 10# Cuts                             : 1.8850-2.1050     
Monterey Jack 10#                            : 1.8950-2.0550     
Grade A Swiss Cuts 6 - 9#                    : 2.5900-3.0700     
     
1500C Robert.Hunter@ams.usda.gov  608.250.3217