dp_2025_02_01 - 64
COMMODITIES OUTLOOK
Saputo has been in the process of closing and consolidating
various plants and AMPI closed a smaller cheese plant in
South Dakota recently, as well. This is just a sampling of
recent or planned closures.
Additionally, the industry can theoretically continue to
run all of the existing plants at their current level and run the
new plants near capacity, but what is the benefit? The price of
cheese will collapse, which will hit the value of its inventory
and it will put downward pressure on cheese plant margins and
hurt the dairy farmers. It's possible cheese makers will try to
limit cheese production to roughly match the sales they expect
to have. So if new plants take some market share, we could see
production at existing plants cut. We saw that behavior in the
cheese market throughout 2024.
DEMAND
Per capita cheese consumption in the US has increased from
30.7 lbs per person in 2003 to 40.7 lbs in 2024.
There is a very strong and relatively steady uptrend in
domestic cheese consumption, which has averaged 2.2%
There is a very strong and
relatively steady uptrend in domestic
cheese consumption, which has
averaged 2.2% over the past 20 years. "
over the past 20 years. If we see a 2.2% increase in 2025,
US consumers would absorb an additional 300 million lbs
of cheese.
Over the past 10 years, cheese export growth has averaged
3.9% growth. If we saw the same growth in 2025, the US
would clear an additional 44 million lbs of cheese into the
export market. On top of that, cheese stocks at the end of
2024 were down about 100 million lbs from last year. So it will
take an additional 444 million lbs of cheese to meet trendline
domestic consumption and export growth and to rebuild
inventory back to more normal levels in 2025.
If cheese production is steady at all of the existing plants
and the new plants ramp up at my assumed pace, then the US
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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
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