CME Cheese Prices Rise after CWT Activates Export Program
April 9, 2010
CME Cheese Prices Rise after CWT Activates Export Program
Cooperatives Working Together (CWT) reactivated its Export Assistance program to boost sales of U.S.-made cheddar cheese. Block cheese prices have risen by 25 cents per pound since the announcement on March 18.
Last used in 2008, CWT's Export Assistance Program assists member cooperatives with exporting eligible dairy products and establishing overseas markets for their members' milk. While the program had, in the past, exported whole milk powder, butter, and butterfat, the focus in the short-term was on cheddar cheese, as this would have the most impact on farm-level milk prices.
“After conducting a thorough economic analysis, it was clear that implementing the Export Assistance program and focusing on cheddar cheese could provide the most immediate positive signal to address continuing low producer milk prices,” said Jerry Kozak, President and CEO of NMPF, which manages CWT. “Given the smaller spread between U.S. and global cheese prices, and given the sizeable inventories of cheese that are hampering a recovery in milk prices, using CWT’s export program will be expedient and effective.”
While the program had previously exported 186 million pounds of dairy products to 55 countries, CWT advised its members that it would provide additional incentives for sales to the target markets of Japan, Algeria, Egypt, Saudi Arabia, and Australia. CWT believed these were prime markets for sales of significant quantities of cheddar cheese, although it would consider bids for sales to other markets as well.
Cooperatives seeking assistance submit a bid specifying the product to be exported, the quantity of product, the end customer, the country in which the customer is located, and the amount of assistance per metric ton of product needed to make the sale. CWT and U.S. Dairy Export Council (USDEC) staffs evaluate each bid received against world market conditions and the world product prices. If they determine that the assistance requested is reasonable, the bid is accepted. The cooperative does not receive payment from CWT until paperwork is submitted showing that the product has been delivered to the customer.
