Cheese Prices Soar as Heat Stresses Cows, Reducing Milk Supply
quote.bloomberg.com
By Joe Carroll
Chicago Ridge, Illinois, Aug. 25 (Bloomberg) -- The price of the mozzarella that Gary Nickels buys for his pizzeria in suburban Chicago has soared to the highest level in almost two years as a shrinking dairy herd and hot weather tightens milk supplies.
Wholesale cheese prices have climbed as much as 45 percent this year in some parts of the U.S. as production has declined in the $16.5 billion milk industry, government analysts said.
Milk prices are up 54 percent from a year ago, a surge analysts trace to bouts of intense heat that reduced production by as much as 17 percent last month from July 2000, and an 8 percent reduction in the U.S. dairy herd over the last decade. As the cost of milk increased, so did the price of cheese.
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While dairy farmers are rebuilding herds to take advantage of high milk prices, it'll take at least two years for new calves to reach maturity and start adding to milk supplies, analysts said. That means milk and cheese prices are likely to remain elevated until the summer of 2003.
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Shrinking Herd
Dairy farmers were quitting the business throughout the 1990s because of depressed milk prices and better profits in other livestock ventures, analysts said.
From January to July 2000, milk futures traded on the Chicago Mercantile Exchange averaged 9.7 cents per pound. For that same period this year, prices rose to an average of 12.2 cents per pound. In the past two months, the average price has climbed to 15.3 cents.
``We went through a long period of depressed milk prices for a few years there that drove a lot of farmers out of business,'' said Ed Kneubuehl, vice president of Berner Foods Inc., an Afolkey, Illinois-based cheese company that processes 50 million pounds of milk annually. ``Now there's not just the heat to deal with, but the fact that there are fewer people milking cows.''
By 1999, the dairy herd had shrunk to 9.156 million head, from 9.993 million in 1990, USDA figures show. The number of dairy farms fell 5.2 percent last year from 111,000 in 1999. |
