There’s been a ripple of anxiety coursing through most Wisconsin cheese companies. Over the past few weeks, the price relationship between barrel and block cheese in Chicago has inverted.
Dr. Mark Stephenson with Wisconsin’s Center for Dairy Profitability explained the situation to Pam Jahnke. “We had a long history when blocks were always above barrels. 20 years ago when we did the Federal Milk Order Reform, at that point in time barrels and blocks moved very closely together. They averaged something like 3 cents difference, with blocks being higher. But, man, since the pandemic – anything goes.”
Stephenson says over time barrels and blocks have turned into very different markets – each serving a different purpose.
In Wisconsin, that’s important. Barrel cheese is primarily used for things like processed cheese, wrapped single slices or cheese whiz type products. Stephenson says Wisconsin used to have plants that could swing from barrels to block processing, dependent on the market. That flexibility is largely gone now. Stephenson says today’s Wisconsin cheese producers base their pay price off of the price of block cheese in Chicago. When we have barrels that are above blocks, that means Wisconsin’s milk price goes down. Virtually all cheese products, including the specialty cheese made in Wisconsin, is based on the price of block cheese in Chicago.
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