dp_2025_02_01 - 62
COMMODITIES OUTLOOK
Cautious
optimism
Despite a strong case for a growing cheese
market, there are several factors still in play.
by Nate Donnay | nate.donnay@stonex.com
I
t's a story so simple that it must be true.
There are about a half-dozen new cheese plants or
significant expansions of existing plants that are scheduled
to come online by mid-2025. If all of the plants run at
capacity they could produce about 70 million pounds of
cheese per month, which would be a 5.9% increase in US
cheese production.
In the past 20 years, US cheese production growth has
averaged just 2.1% per year, with the largest annual increase
being 4.1% (which pushed cheese prices down to roughly
$1.15/pound in early 2006). So a nearly 6% increase in cheese
production would be massive and would be very bearish for
cheese prices.
Most of the industry believes that this bearish scenario will
play out. The plants have been built, the milk appears to be
available and they aren't going to let expensive assets sit idle.
62 JAN-FEB 2025 | DAIRYPROCESSING.COM
It is a simple headline-grabbing story and maybe the whole
thing will unfold exactly the way everyone expects it to. But
the world is a complicated place and there are plenty of less
bearish scenarios that could potentially play out.
CAPACITY CONSOLIDATION
The first counterpoint to the bearish argument is capacity
consolidation. The idea that cheese production could increase
by nearly 6% assumes that all the new plants run at 100%
capacity and that there is no change in production at existing
plants. We know that is not true.
Reported in various news articles, Great Lakes Cheese has
stated that as it ramps up new capacity in Franklinville, NY,
it will retire capacity in Cuba, NY. Leprino Foods has built a
large new plant in Lubbock, Texas, and announced plans to
shut down its Lemoore East plant in California in late 2025.
©k8most-stock.adobe.com
http://www.DAIRYPROCESSING.COM
dp_2025_02_01
Table of Contents for the Digital Edition of dp_2025_02_01
dp_2025_02_01 - Intro
dp_2025_02_01 - FC1
dp_2025_02_01 - FC2
dp_2025_02_01 - 1
dp_2025_02_01 - 2
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