July 6

7/6 – In Thursday’s Supply Chain Chat, Eric Meyer of HighGround Dairy said that in the initial shock of restaurants and schools closing, farmers were forced to dump milk and cut back output by over 10% in April. But then retail demand kicked in. Americans started drinking more fluid milk, many eating cereal for breakfast at home. The government piled on, committing $1.2B to the dairy industry in April. In June, foodservice sales pick-up and the supply pipeline was empty. Block cheese prices, which started the year at $2.00/lb, plunged to 20-yr lows of $1.00 on 4/15, soared to all-time highs of $2.81 on 6/24, and remain high at $2.6750 (7/2.) Meyer pointed out that the forward futures curve for cheese was averaging “just” $1.81 for Q4 2020 and $1.71 for the 1st half of 2021. Buyers who can survive with sub-$2.00 cheese were encouraged to hedge at least part of their needs.