Cheese markets are slowly losing momentum. There is nothing dramatic in the move, but the tone has turned softer for several varieties. US Cheddar is leading the way down, backed by EU and US Mozzarella, while other cheeses follow at a distance. Some producers and traders are already lowering prices in anticipation, though the lack of a shared view on the market is holding others back.
The reason is that supply exceeds demand. Production has been growing for months, and demand is now getting a little weaker too. Part of that is seasonal, especially for Mozzarella. Part of it is inflation: cheese is much cheaper than a year ago, but many other things in the grocery basket have gone up. The distinction matters: prices are down because demand cannot keep up with production growth, rather than because people are eating less cheese.
The United States is the heavier weight on the global market. Plants are keeping their vats full to benefit from very high whey prices, and cheese is starting to feel like the by-product. US cheese stocks climbed counter-seasonally in August to 1.44 billion pounds, up 2.3% on the year, even with exports at record levels. Mozzarella shows the most production growth of any US cheese type, up 2.9% on the year against 2.1% for all types combined.
That US supply is making life harder for European sellers. US Cheddar trades at a wide discount of around $1,400 per tonne to European product, which leaves EU Cheddar largely priced out of export markets. EU Mozzarella exports are falling short of expectations too, with the US price roughly $800 per tonne below the EU level. In Europe, Mozzarella is leading the softer tone now that summer demand has passed and foodservice demand weakens under high inflation. EU Cheddar is holding up better, as seasonally lower milk output in the UK and Ireland keeps availability relatively tight.
Gouda has started to soften after stabilizing in the first half of September, as good milk intake meets buyers who have covered most of their needs for the year. Emmental continues to track the wider complex, with ample product from earlier in the year still on offer.
The outlook for the fourth quarter is a gradual drift lower rather than a sharp correction. The full analysis has the detail by variety, including where each market lacks the trigger to turn around.
