Since the beginning of the COVID-19 pandemic, U.S. cheese prices have been on a roller coaster. University of Minnesota Professor in Applied Economics Marin Bozic says prices have touched both ends of the spectrum. After reaching highs, prices are now starting to pull back. “When our prices dropped in April, overseas buyers used the opportunity to lock in forward sales for a few months. In May, the lock down ceased and food service distributors started refilling their inventory, which brought back food service demand to some extent,” says Bozic. “Folks that didn’t eat out had to eat anyway, so they ordered more pizza deliveries and shopped at retail. On top of that, the USDA’s food box program is a real game changer.” More COVID-19 aid is expected for dairy farmers this year and another peak on the roller coaster is approaching. “When you’re at the peak, the only way is down. How fast we go down and at which level we level off is anyone’s guess, but it’s clear $3 cheese isn’t a sustainable price,” explains Bozic. “My biggest concern isn’t that cheese prices would go from $3 to $2, it’s that some producers may learn the wrong lesson from this experience. The lesson being they don’t need to hedge, because Uncle Sam will make risk management unnecessary. I don’t think that’s the lesson, because not all pandemics fall in election years.”
