We Have a Cheese Problem

With more cheese competing for buyers around the world, could the global market be headed for a price war?

U.S. cheese plants are running full, whey protein demand is supporting production and exports have been strong. But at home, cheese demand remains soft.

That puts more pressure on exports to keep product moving.

In episode 106 of The Milk Check, host Ted Jacoby III sits down with the T.C. Jacoby & Co. cheese team to discuss what happens when growing U.S. production meets intensifying competition overseas.

In this episode, we cover:

Why international buyers are asking for more cheese varieties, and where that could create opportunities for U.S. suppliers

How freight costs and the strength of the U.S. dollar could make American cheese less competitive overseas

What happens when stronger milk production in New Zealand and continued competition from Europe could puts pressure on global cheese prices

Listen to The Milk Check episode 106, “We Have a Cheese Problem,” for the T.C. Jacoby & Co. team’s take on what could be ahead for the global cheese market.

Got questions?

We’d love to hear them. Submit below, and we might answer it on the show.

Ask The Milk Check

Transcript:

[Intro commercial text not included]

Ted Jacoby III: Coming up on The Milk Check.

Are you saying if we produce 2% more cheese and it all has to go into the export market, it’s gonna be a price war?

Brianne Breed: Yes.

Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby & Co., your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in.

Ted Jacoby III: Hello, everybody, and welcome to The Milk Check.

Today is September 21st. Today we’re gonna talk cheese.

I’ve got my cheese team here today. We’ve got Brianne Breed, Jeff Daanen, Miguel Aragón, Jennifer Kuo, and Michael Brown joining us. We even have Diego Carvallo to help us talk a little bit about international. But we’ve talked a lot about cheese, we’ve talked a lot about how much cheese we’re producing and how whey protein seems to be driving cheese production right now.

But I thought we’d get some really great insights from our cheese team in terms of what they’re seeing out there. Bree, I’ll start with you. If you had to explain the U.S. cheese market right now without even looking at CME prices, how would you describe it?

Brianne Breed: There’s a lot of cheese out there right now, especially a lot of cheddar.

The large plants that have expanded over the last few years are running very full, and a lot of that is because of what you mentioned: with whey being in high demand. We’re finding a lot of cheese out in the market. Exports have been very strong. I think that there’s been a really big push over the last few years to get more and more cheese exported from the United States, and we’ve been very successful. Mozzarella seems to be growing every year. But at the same time, domestic demand has definitely slowed down.

Restaurants lost maybe 1% to 2% foot traffic this year. Retail demand is also down to flat. We’re in this weird spot right now where we have a lot of cheese being made and we’re exporting a lot, but domestically, we’re not consuming as much as we have in the past.

Ted Jacoby III: What’s going on in the domestic market? Are we seeing any growth anywhere?

Brianne Breed: We are seeing growth in a few of the pizza chains that have been making some good pushes using mozzarella and some good deals just because, you go to out to a restaurant right now and it’s very expensive to feed a family of four, where you can just order a couple of pizzas and have your fixed cost.

You know what you’re paying. And so pizza’s been doing better than it was the last couple of years, which I guess you could say is great because it was struggling for a couple of years there. But as far as anything positive domestically, it’s been a struggle, I think, on the cheese side.

The positives are really more on the powder side and on t