Jan 10 2020

DAVE’S WEEKLY MARKET UPDATE

Eggs:

Eggs dropped 10 this week and seem to be near the bottom as the decreases have slowed down. We are hearing that farmers are putting their flocks out to molt which stops them from producing for a while. This will stop the decreases and tighten up the supply of eggs. I guess time will tell but I would venture to guess that within a few weeks they will start to rise.

Butter:

The butter market dropped early this week and rebounded today. I believe we hit bottom this week. Futures show slightly higher for this month and a few cents higher for February.

 

Cheese:

Both Block and Barrel traded actively this week and both dropped. The close on Blocks is slightly less while much lower on Barrel.  The Block is almost .30 over the Barrel so I expect the Block to drop more to close the gap. We are in the busiest season of the year for Block cheese due to college football and the upcoming Superbowl, That is the highest demand day for cheese of the year!

Cabot cheese shortages:

Cabot has been having severe shortages in packaged cheese due to labor issue. Please see below from Cabot directly.

This is the email that Cabot sent to their broker community and for the trade…

 

I am hoping that you all had a harmonious Holiday season and I wish you all the very best as we start fresh and rejuvenated into a new decade.

 

As many return to their desks after the Holidays they are becoming aware of shortages to their orders that began the week of December 15th.  Our Cabot Cut and Wrap facility located in Cabot, Vermont has been plagued with finding and retaining qualified workers throughout 2019.  As we moved towards the end of the third quarter, we realized that we were becoming challenged with lower than expected inventory levels to support incremental sales during the fourth quarter.

 

Significant rises in the cost of milk and other cost increases associated with the components in the production of our dairy products coupled with a sustained Block market for almost the entirety of 2019 has forced us to necessitate a price increase to our Aged-Branded Cheeses and Cultured products.  One we had not taken in several years.

This increase is forthcoming and is effective January 15th 2020.

 

We gravely underestimated our projections for our customer’s purchasing habits.  The lack of available labor and the increase in order demand plans, along with the approaching Holidays placed our Cheese inventory well below a stock level that we felt comfortable.

 

Immediately, we began to put plans into place so that we could begin to rebuild our inventories.  The harsh realization was that we no longer could keep up with the order demands and convert the product as quickly as needed.

This situation is affecting every customer for all cheeses.  We do not have a solid timeline for when each cheese will have the inventory needed to support sales.  We ask that you be patient with everybody involved as we rebuild our cheese inventory throughout the first quarter.

We thank you for your continued business and wish you a safe and relaxing weekend.