Record-High Cheese Stocks Weigh on Milk Prices, But Should They?

Record-High Cheese Stocks Weigh on Milk Prices, But Should They?

In the late 1980s, the Agriculture Department effectively cleared the shelves of excess dairy products. Over a five-year period, as part of the now-expired dairy price support program, USDA purchased 1.5 billion pounds of butter, 1.7 billion pounds of cheese and 2.7 billion pounds of non-fat dry milk totaling $6.3 billion. The dairy price support program remained in effect through the 2014 farm bill but saw limited use following 2009 due to milk prices above support levels.

Now in 2017, with U.S. milk production expected to climb to a record 217.3 billion pounds, commercial dairy product inventories have reached highs not seen since the days of the price support program.

USDA’s April 24 Cold Storage report revealed March 2017 inventory levels for total cheese at a record-high of 1.3 billion pounds. American-style cheese in cold storage was 803 million pounds and butter storage was 273 million pounds. For American-style cheese and butter, these March inventory levels are the highest levels since 1984 and 1993, respectively.