A dairy economist says the collapse in the cheese market has been perplexing, but he has a theory on why markets have had drastic swings in recent weeks.
Nate Donnay with StoneX says no one wants to build inventories of 2-dollar cheese as milk production is building faster than expected.
“Instead of allowing inventory to build, they’re bringing the cheese to the spot market and dumping it there.”
Donnay expects inventories could start to build if the trade settles around $1.70 to $1.80. Looking at the June disappearance when not accounting for government purchases, he says cheese demand was flat.
