Cheese Processors with stocks are under pressure as Less = More

Ian has received a handful of emails plus one telephone call from readers who feel he should not have written his 11^th November bulletin commentary “what goes up must come down.”  One caller suggested he tones it down because he was fuelling price cuts which if Ian keeps quiet would be less than he suggested.

Well Ian has thought about this and decided that the most irresponsible thing to do is keep quiet and to pretend that things are not that bad.  Anything he writes will not affect the milk price by so much as 0.001ppl. Have we all forgot that several years ago farmers weren't warned enough about an impending market crash that was on the cards and they went on merrily spending money that was not going to come in and many got in a mess. Market watchers and commentators owe it to you to tell you what's coming down the track especially when it’s at the speed this is coming.

The situation is not confined to liquid because the cheese market is so serious the fear is not all processors will ride this storm. 

The reality is it's now heading for carnage and it has not suddenly come onto the radar, the signs have been there since August.

Look at the facts.  Cheese makers paying 50p for milk today means a £5,000 tonne selling price for mild cheddar. 

Today mild cheddar is trading at between £4,300 tonne- £4500 (AKA 43p- 45ppl litre ex farm) with unconfirmed reports of some distress sales at less. That’s a long way off its £5000 price tag.

Only a few months ago cheese stocks were close to non-existent now they are accumulating daily and back to what some describe as “normal stocks” but all made with 50p milk = and overnight worth £500 tonne or more less instantly and not increasing in value.

For sure Branded cheese will fair better but with the cost of living squeeze upon us consumers are certainly trading down and increasing their buying of value cheese.

If that wasn’t enough several cheese buyers have stopped/suspended buying cheese until January spotting that the market has headed south at a record-breaking rate, in only a few weeks.

It’s a lethal cocktail.  It’s not right, it’s not fair but it is the market.  It’s the market supply and demand which determines prices NOT the cost of producing the milk (unless you are on a COP contract).  One thing which has without doubt contributed to the impending carnage have been the farmgate milk price increases since September.  At 45/46p there was no sign of increased production at 48 to 50p it’s like a tsunami.  Did those price increases contribute or trigger the rapid increase in production or is it more weather related?

Less = More and More Milk today is resulting in prices set to collapse.

It’s a hell of a mess and set to return to all too familiar yoyo prices seen many times before.

We haven’t learnt (Not just the farmers) from history.  It’s very grim and Ian can’t sugar coat it and within weeks his comments will be judged for their accuracy.

The good times for farmers haven’t even come close to balancing out the accumulated losses.  Higher prices have been very short lived and any avalanche of prices in the first three months of 2023 will result in a large number of farmers saying that’s it I am out, I am not prepared to work for nothing, pay more for staff (who are difficult to recruit and retain) and pay more for inputs any longer!