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New innovations in snack and single-serve dairy hit shelves

Sept. 20, 2019

By Rena Archwamety

MADISON, Wis. — As consumers increasingly turn toward healthy, functional snacks and convenient meals, cheese and dairy companies are meeting their demands with new on-the-go options tailored to their tastes.

“The trends we’re seeing in snack cheese are in more bold flavors for natural cheeses: smoked, peppers and aged. People want to explore flavors and textures, and natural cheese is great for that journey,” says Chip Schuman, senior vice president of marketing, Sargento.

Schuman says Sargento’s new product development and insights groups noticed an increase in snacking more than 10 years ago, and the company sees continued growth in demand for convenience and snack items in the future.

“We lead busy lives and snacks provide on-the-go fuel as well as a short break for personal time. Snacks are the new meals that consumers have truly embraced,” he says.

“Snackification” has become a food industry trend driven by increased demand for snack products and smaller package sizes to accommodate consumer demand for straightforward nutritional information and portable foods, according to Danielle Ohl, digital and online marketing Specialist, Viking Masek (vikingmasek.com/packaging-machine-resources/packaging-machine-blog/how-snackification-is-shrinking-food-packaging).

With changes in the U.S. nutrition guidelines regarding fats and increased popularity of keto and low-carb diets, dairy products in single-serve package formats have been growing as snack foods, Ohl says. Innovations she points to include single-serve packages of cottage cheese; snack-size packages of cheese cubes; protein packs featuring combinations of cheese, meat and nuts; and sour cream in a squeezable, flexible pouch with a flip-top cap.

• Indulgent bites

A white paper from Viking Masek on flexible snack packaging reports 36 percent of consumers seek gourmet flavors in their snack choices, and consumers are increasingly choosing premium snack items rather than moderate or low-priced options.

Savencia has just started to roll out its Supreme Brie Bites, a 1-ounce snack-size version of the Supreme Brie it launched earlier this year.

The Supreme Brie Bites are individually wrapped using Savencia’s proprietary technology to help preserve the flavor and quality of the cheese. A resealable package containing five Supreme Brie Bites retails for $5.99-$6.99.

“When we talk about Brie, we have so many different options, but not in a single-serve package,” says Sebastien Lehembre, senior brand manager, Savencia USA. “A lot of time people don’t want to buy a 6-ounce or 8-ounce piece because it’s too much. That fact that you have five units in a bag allows you not only to have one good snack, but to use just enough to decide if you want more.”

He says the single-serve packaging allows Supreme Brie Bites to be enjoyed on-the-go in lunches or as a healthy snack with a good portion of recommended calcium and protein values.

“It’s geared toward a younger audience — single people or people living busy lives, or with young kids,” Lehembre says. “They want to have a few different cheeses in the fridge so they can have them have at different occasions.”

• Balanced design

Sargento’s Balanced Breaks line first launched in 2015 with four different pairings of natural cheese with roasted nuts and dried fruits in a convenient, portable two-compartment tray. Balanced Breaks were the most successful product launch in Sargento history, generating more than $150 million in its first two years on the market.

The line now includes 18 varieties with the addition in 2017 of Sweet Balanced Breaks, combining cheese with sweet ingredients like dried fruits and dark chocolate, and Sunrise Balanced Breaks, introduced earlier this year, which pair cheese with ingredients such as walnut oat granola, quinoa clusters and maple pumpkin seeds.

“The success of Balanced Breaks has driven growth for the natural cheese category and has resulted in the emergence of a new multicomponent snacking section in the dairy case,” Schuman says. “We’ve gotten great response from consumers. They love the product, the package which by itself has won awards, and they love the varieties. Consumers tell us that Balanced Breaks is a snack that tastes good and has health benefits like calcium and protein. It satiates hunger better than simple carbohydrates. It offers balance consumers crave.”

The concept of Balanced Breaks is all about balance, from the ingredients to the packaging, Schuman explains. In recent years, wholesome, protein snacking has gained traction and people are moving toward real, unprocessed foods.

“Consumers told us they were into wholesome snacking outside of cheese — but it didn’t always taste good, then other consumers were into great taste — but those offerings tend to not be good for you. Balanced Breaks hit that balance of great taste and satisfying nutrition they can feel good about.”

Sargento worked through several iterations of concept testing, ingredient combinations and packaging prototypes before landing on the final product in a yin-yang shaped container.

“What signified balance better than that yin-yang shape? It is such a clear connection because it’s the physical embodiment of the product benefit,” Schuman says. “If you look at the graphics, we pulled it through there as well. All the elements of the design in addition to the name of the product are supporting what that benefit is for consumers.”

• The new energy drink

In its 2018 Snacking Occasion Consumer Trend Report, Technomic says 34% of survey respondents say they are snacking on healthier foods in the last couple years, while 25% plan to snack more healthfully in the next 12 months. The health attributes that ranked highest in appeal were “high in protein” and “energizing.”

Consumers increasingly are including beverages such as smoothies in their definitions of snacks, and the report notes health-halo attributes such as “all-natural” or “GMO-free,” in combination with high-protein and functional claims, can help position these as smart meal replacement choices.

This makes room for innovations in single-serve dairy drinks as a convenient source of protein and nutrition that can be consumed after exercising, as a quick meal replacement or for an energizing snack.

Organic Valley and Danone North America both recently launched new caffeinated single-serve dairy beverages as functional alternatives to popular energy or coffee drinks.

Organic Valley in August launched its reformulated Fuel line of high-protein milk shakes that now contain 50% less sugar than before. Additionally, a new coffee variety contains the equivalent caffeine to an 8-ounce cup of coffee. The line also features a new packaging design.

“Our new packaging is a paper carton, the recyclable Tetra Prisma with a dream cap for easy drinking and which can be resealed to preserve freshness. We also designed the packaging to clearly communicate our product attributes — 20 grams of protein, 50% less sugar and the USDA organic seal,” says Laurie Drake, brand manager, Organic Valley.

Earlier this week, Danone North America launched its new Oikos Pro Fuel protein-rich caffeinated dairy beverage, which contains 25 grams of protein and 100 milligrams of caffeine per 10-ounce bottle. It is available in Vanilla, Mixed Berry, Peach and Strawberry Banana flavors. The company says this new product blurs the lines between growing categories such as ready-to-drink coffee beverages and energy drinks, and builds on Oikos Triple Zero’s response to demand for high-protein yogurt.

“The energy drink market is a large and growing space with consumers looking for nutritious energy sources to help them focus on their goals,” says Ben Arbib, innovation brand manager, Oikos. “Oikos Pro Fuel delivers protein to help build muscle and caffeine to help you feel alert. We’re proud to offer a great-tasting beverage with the high-quality protein and caffeine from coffeeberry extract.”

The company adds that Oikos Pro Fuel is the first product in a new portfolio focusing on high protein and functional nutrition.

• Scaling down

Single-serve cheese snacks and dairy beverages are visibly growing in retail outlets, but another rapidly growing category for single serve is in items like salad kits and meal boxes. Growth in all these categories has led to increasing demand for smaller-sized packaging solutions.

Viking Masek, which provides packaging machinery for a variety of industries, offers its high-speed velocity bagger with the Yamato Omega scale 0132M to weigh and fill cheese and other products in small-scale packages, which it will showcase at Pack Expo. New improvements have allowed this machinery to scale to smaller sizes and increase speeds to 150-200 bags per minute, according to Rick Leonhard, president, Viking Masek.

“The technology has been around for a while, but the model scaling technology only has been around for about a year,” Leonhard says. “A cheese company can run diced Parmesan, shredded Parmesan or shaved Parmesan in small packs, or could run up to an 8-ounce pouch. Other companies, who are co-packing for the salad business or whole meal kits, are not only packaging cheese but also croutons, bacon bits or tortilla strips on it. Anything you would put in a salad kit or whole meal delivery kit.”

While many cheese companies previously focused on larger and bulk sizes, the increased speed of this equipment allows companies to package smaller portions at a rate that results in better returns on investment, Leonhard says.

“What’s interesting, this demand has been really missed by most of the cheese companies. A lot of them have focused in on 5-pound for institutional,” he says. “The key with this is you have to be able to run it fast or you don’t make any money. With 150-200 bags per minute per line, now they’re in a sweet spot and can make a good return on the equipment because of the output we can provide.”

CMN


Reports: WTO to allow U.S. tariffs against EU in dispute

Sept. 20, 2019

WASHINGTON — The World Trade Organization (WTO) has ruled that the United States can impose tariffs on European goods in a dispute over subsidies the EU grants to large civil aircraft manufacturers, according to reports.

In April, the office of the U.S. Trade Representative (USTR) began a process to identify products from the EU to which additional duties may be applied until the EU removes its subsidies. Some dairy products, including European cheeses, are included in the list of possible products subject to tariffs.

Both Reuters and Politico reported that sources familiar with the matter confirmed that WTO last Friday approved the U.S. request to impose tariffs. The United States has proposed tariffs of up to 100 percent on European goods worth $11.2 billion a year. WTO is expected to announce the scope of its decision in the week of Sept. 30, Reuters reports.

Last month, U.S. dairy industry members testified at USTR hearings on EU dairy products that could be subject to these tariffs. (See “Dairy industry offers testimony at latest hearing on EU tariffs) in the Aug. 16, 2019, issue of Cheese Market News.) The National Milk Producers Federation noted that such tariffs could help compel EU compliance with its WTO commitments while helping to mitigate the trade imbalance between the United States and EU. Meanwhile, the Cheese Importers Association of America (CIAA) urged USTR to remove all proposed cheese tariffs on the list, saying they could negatively impact U.S. jobs, consumers, food safety and USDA’s Dairy Import License Program. Last week, members of CIAA’s executive committee met with officials in Washington to further share the impact of the proposed tariffs against the EU on the U.S. cheese importing community.

CMN


August 2019 milk production up 0.4% from previous year

Sept. 20, 2019

WASHINGTON — Milk production in the 24 major milk-producing states during August totaled 17.43 billion pounds, up 0.4% from August 2018, according to preliminary data released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Milk Production chart.)

July revised production in the 24 major states, at 17.52 billion pounds, was up 0.4% from July 2018. The July revision represented an increase of 38 million pounds or 0.2% from last month’s preliminary production estimate, NASS reports.

Production per cow in the 24 major states averaged 1,986 pounds for August, 18 pounds above August 2018. The number of milk cows on farms in the 24 major states was 8.78 million head, 48,000 head less than August 2018 and 1,000 head less than July 2019.

For the entire United States, August milk production was up 0.2% from a year earlier to 18.28 billion pounds, NASS says. Production per cow in the United States averaged 1,962 pounds for August, 19 pounds above August 2018. The number of milk cows on farms in the United States was 9.32 million head, 71,000 head less than August 2018 and 2,000 head less than July 2019.

California, the nation’s leading milk-producing state, saw a 1.5% increase from the previous August to 3.35 billion pounds in August 2019. The increase was driven by an increase in production per cow, with average production climbing to 1,940 pounds, up 35 pounds from August 2018. There were 1.73 million cows on California dairies in August 2019, 6,000 head less than August 2018 but unchanged from July 2019.

Wisconsin followed with 2.61 billion pounds of milk in August, down 0.5% from its production a year earlier. Production per cow in Wisconsin averaged 2,060 pounds, the same as in August 2018. There were 1.27 million cows on farms in Wisconsin in August, down 7,000 head from August 2018 and down 1,000 head from a month earlier.

Among the 24 major milk-producing states, five states experienced declines of 4% or more compared to August 2018. Virginia experienced the biggest decline, down 11.4% from its production the previous year. NASS reports Illinois was down 7.9%, Arizona was down 6.1%, Pennsylvania was down 6.0% and Indiana was down 4.0%

CMN



Minerva Dairy celebrates 125 years
Company launches updated look, new products

By Kate Sander

MINERVA, Ohio — As it celebrates 125 years as a family-owned dairy business this year, artisan buttermaker Minerva Dairy also is launching an updated look and new products.

As consumers become increasingly aware of butterfat and the benefits of real butter, now is the time to increase consumer awareness of Minerva Dairy’s hand-rolled premium butters, say sister and brother duo Venae Watts and Adam Mueller, the fifth generation of their family to operate the business. They say Minerva’s products are the answer for the increasing number of consumers who are looking for premium butter products.

The company has been in business since 1894 and focusing on hand-rolled butter since World War II. Although the business has grown and evolved, some things — like the care that goes into each product — has changed little.
Minerva Dairy’s naturally-cultured butter is made with no artificial ingredients, produced by slow-churning small batches of milk from pasture-raised cows. The butters have an 85% butterfat content, as opposed to commodity U.S. butter that is typically 80% butterfat. With more butterfat and less air trapped in the butter than high-speed churns produce, Minerva Dairy’s butter is creamier and richer than many of its counterparts, Watts says.

The buttermaker buys milk from about 50 local family farms, ranging in size from two cows to 400 head. The company’s use of sea salt also sets it apart from other butters, Mueller notes.

“Our butters have a deeper, denser flavor profile … it’s more complex,” Mueller says. “It’s the exact opposite of flavorless butter.”

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Strong, steady demand boosts price of CME Cheddar blocks

September 6, 2019

By Alyssa Mitchell

MADISON, Wis. — The Cheddar block price at the Chicago Mercantile Exchange (CME), supported by steady demand and tightening block production, continues to inch toward $2 per pound.

Whether it will hit that mark is uncertain, analysts say. The July “Dairy Products” report released by USDA this week shows U.S. manufacturers are making less Cheddar, with production down 5.5% from last July. Wisconsin Cheddar production was down 2.0% in July, and production is down 9% in the Western region, the report says. (For more information, see related article in this issue and chart on page 14.)

In addition, U.S. American cheese stocks were nearly 6% below last year on July 31, according to the latest “Cold Storage” report, notes Mike McCully, owner, The McCully Group LLC, New Buffalo, Michigan. July total cheese stocks also declined for the first time during July since 2014, he adds.

“This helps explain the upward movement in cheese prices since this spring,” McCully says.

He adds that while exports are expected to be lower in the second half of this year given the premium U.S. cheese carries relative to other regions, domestic demand has been good and will improve with the upcoming fall holiday period.

The Cheddar block price at the CME reached $1.9975 per pound today, a high not seen since November 2014. Meanwhile, the Cheddar barrel price settled at $1.7425, widening the block/barrel spread to 25.5 cents.

John Newton, chief economist for the American Farm Bureau Federation, notes that for the better part of the last 20 years, block and barrel cheese prices have followed each other closely, with an average difference of 1 cent per pound, and milk pricing formulas essentially weighted them equally.

Since 2017, however, things have changed. Increased barrel cheese production has resulted in a widening price spread between block and barrel cheese.

“That spread is equivalent to a nearly $600 million reduction in dairy farm revenue over the past two-and-a-half years,” Newton says. “This divergence in block and barrel prices was likely unforeseen by the architects of the current milk pricing system two decades ago.”

The widening block-barrel spread is due to a variety of factors, Newton notes.

“First, growing milk supplies and tight processing capacity in some regions led to distressed milk being dumped or sold at a discount. Any of this milk that flowed into barrel cheese production likely increased supplies and contributed to lower prices. Continued barrel production in the face of low prices is made more sustainable depending on the magnitude of the price discount of milk going into the plant,” he says.

“Second, cheese exports — mostly blocks — have improved in recent years. Cheddar exports increased 43% in 2017 and then increased by 14% in 2018. The increased demand for block Cheddar cheese has increased the price relative to barrel cheese,” he adds.

Other factors also contribute to the wide price gap between blocks and barrels, including a reduction in processed cheese demand (i.e., barrels) and increased demand for white whey, a byproduct of barrel cheese production, he says.

Eric Meyer, president, HighGround Dairy, Chicago, says cheese prices may be at this price level for the next 60 or even 90 days, but the longer they stay elevated, the worse it could be from a pricing perspective into next year.

“We are very uncompetitive in the export market, which could have impacts into the first half of 2020,” he says. “I don’t see us lasting up here too long, but we’ll likely see markets at $1.80 into the $1.90s through October.”

USDA’s Dairy Market News notes some contacts previously suggested $1.80 block cheese market prices would hinder buying.

“Now that block prices approach $2 and buying is still active, the needle is surely moving, at least in the near term,” Dairy Market News says.

Meanwhile, CME butter continues to pull back, settling at $2.1725 per pound today.

Although butter markets have been mostly stable, they are in the low end of the range currently, says Dairy Market News.

“Undoubtedly, some reports have put pressure on market prices. Additionally, imports have increased from Oceania, and European Union butterfat is a bargain currently,” Dairy Market News says. “That said, butter markets have been a bastion of steadiness in 2018 and 2019, therefore contacts are reticent to suggest markets will slip from their range-bound position, at least in the near term.”

Sara Dorland, managing partner at Ceres Dairy Risk Management, Seattle, says as butter output continues to expand — along with higher imports and lower exports — stocks remain elevated.

Once the market determines butter holdings are adequate to meet holiday demand, prices may move lower, as they have in years past, she says.

“That said, lower prices could encourage demand, so prices could still make another run higher before the end of the year,” she adds.

Meyer agrees CME butter certainly has the potential to increase again, but “as bullish as the data is for cheese, it’s not for butter.”

He notes butter production was up in July and has been strong all year. Cold storage numbers are quite bearish, he adds.

“Every bearish data point we’ve seen makes us less confident that there’s a rally coming,” Meyer says. “We still believe that $2.20 is a price that’s relatively well supported, but we don’t know how much momentum we have to the upside.”

Other global market fundamentals may weigh on U.S. dairy prices as the fourth quarter approaches.

McCully notes markets don’t like uncertainty, and market factors like African swine fever, tariff disputes and Brexit are directionally bearish for dairy prices.

“While the supply side of dairy leans a bit bullish with tighter milk supplies in Europe and the U.S., global demand growth has eased and with an uncertain economic climate, buyers are more conservative in their approach to the market,” he says.

Dorland agrees, noting the U.S.-China trade dispute (see article in last week’s issue) is keeping U.S. exporters from participating in a growing market for cheese and milk powder.

“Overall, Brexit and the U.S.-China trade dispute have added a lot of uncertainty to the mix as the end of 2019 approaches — uncertainty is never good for markets,” she says.

CMN


New York state supports diverse dairies, award-winning cheese

September 6, 2019

Editor’s note: In our series, “From Cow to Curd: A Look Across the Nation,” Cheese Market News takes a look at the cheese and dairy industry across the United States. Each month we examine a different state or region, looking at key facts and evaluating areas of growth, challenges and recent innovations. This month we are pleased to introduce our latest state — New York.

By Rena Archwamety

MADISON, Wis. — New York may be famous for its Big Apple, but the state also is big on dairy as a top manufacturer, major farming state and renowned research and educational hub for the industry.

Leading the nation in yogurt production, New York manufacturers produced 690.3 million pounds of yogurt in 2018, according to USDA data. New York ranked fifth in cheese production in 2018, and currently the state stands third in cows and fourth in milk production.

New York has approximately 620,000 dairy cows across about 4,000 farms, which are concentrated through the Finger Lakes, western and northern regions of the state, with pockets in eastern New York which is close to the big-city markets, according to Tom Overton, professor and interim chair of Cornell University’s Department of Animal Science and director of the PRO-DAIRY program, which assists the state’s dairy producers.

“Forage quality and availability are pretty good in the Northeast. Generally water availability is another strength,” Overton says. “We continue to have lots of regulation around labor and the environment, but overall, New York is a pretty good place for cows, with both its land base and forage and feed quality.”

• Supporting dairy

New York’s dairy industry enjoys a strong support network through programs directed by staff at Cornell University, Ithaca, New York.

PRO-DAIRY is a state-funded initiative that started in the mid-1980s and helps New York’s dairy farmers and agribusiness professionals by providing research, educational programs and access to dairy industry specialists and consultants. A couple of PRO-DAIRY’s current programs include its newly expanded Dairy Advancement Program, which helps farms with up to 700 cows engage with private-sector consultants for business planning, development and production techniques, and the Junior Dairy LEADER program that helps direct high-school age youth to careers in agriculture and dairy.

“The PRO-DAIRY program has been long-standing and very effective over time, one our farms really count on having access to,” Overton says. “I’m not aware of anything like it. Other states have dairy extensions, but as far as a cohesive program that runs along different sectors and specialty areas, it is unique.”

On the dairy manufacturing side, faculty and extension staff from the Cornell Department of Food Science and its pilot plant help the industry develop new products, improve quality, devise food safety plans and solve problems. Dairy businesses also can benefit from the department’s research and an extensive array of workshops held in locations across the state.

“We’re one of about 25 universities in the country with a dairy component, and as a land-grant university, we provide outreach and training to the dairy industry as a whole,” says Rob Ralyea, senior extension associate and pilot plant manager, Cornell Department of Food Science.

Cornell’s dairy plant also has an incubator program for those looking into entering the dairy business who are not sure yet if they want to invest in a plant and equipment. These businesses can sign a year or 18-month contract to help develop a product and get it off the ground.

“We support the dairy industry in New York in just about every way possible,” Ralyea says, adding that the department can help companies with a wide range of products. “In New York, the dairy industry is very diversified, and we carry that expertise across the board.”

New York has a diverse array cheese and dairy manufacturers, from small farmstead operations, to award-winning specialty cheese crafters and affineurs, to leading national and international brands.
There are 360 licensed dairy processors in the state, Ralyea says, estimating that production volume is roughly divided into 30% fluid milk, 30% cheese, 20% yogurt and 20% other dairy products.

Stewart’s and Byrne Dairy are a couple of New York’s largest milk processors. Yogurt giants Chobani and Danone North America are headquartered in the state. Kraft Heinz, Sorrento Lactalis and Great Lakes Cheese are among the major cheese companies with plants in the state, along with well-known specialty brands like Yancey’s Fancy and McCadam Cheese. New York also is home to pioneering sheep and goat milk cheesemakers Old Chatham Creamery and Coach Farm.

• Cheese collaborations

In August, New York cheeses took both Best of Show and Second Best of Show at the American Cheese Society’s 2019 Judging & Competition in Richmond, Virginia.

The top two cheeses both were made by Old Chatham Creamery. The champion Stockinghall is a collaboration with Murray’s Cheese, which matures Old Chatham’s Cheddar in Murray’s Long Island City caves. The first runner-up Professor’s Brie is a collaboration between Old Chatham and Wegmans Food Markets, aged in Wegmans’ Rochester, New York, caves.

Murray’s Cheese, which has been a fixture in New York City’s West Village since 1940, started out selling mostly Italian cheeses and now is known for its high-quality selection of U.S. and imported cheeses. In 2004, Murray’s opened an affinage space in the basement of its retail shop, and in 2014, it expanded its affinage space to its current location at its distribution center in Long Island City.

“Murray’s Cheese has collaborated with over a dozen cheesemakers, both domestic cheesemakers and several producers from France, Switzerland, Spain and Italy,” Steve Millard, senior vice president of merchandising and operations, says of Murray’s affinage partnerships. “Our experience has been very positive with the cheesemakers that we work with.”

New York cheesemakers Old Chatham Creamery and Four Fat Fowl have worked with Murray’s on cave-aged cheeses. Millard notes that Murray’s Cavemaster Reserve Stockinghall is a collaboration resulting in a 100% New York clothbound Cheddar.

“The cheese is made from Old Chatham milk at the Cornell extension pilot plant, sent to our caves in Long Island City and then bandaged and coated in New York state pastured pig lard,” he explains. “It is our intention and our desire to support our local producers, and we are proud of our 80 years selling cheese in New York City and the evolving landscape of cheesemakers in New York state.”

About five years ago, former Cornell University Animal Science Professor and PRO-DAIRY Director David Galton purchased Old Chatham Creamery (which was then named Old Chatham Sheepherding Co.) from its original owners. Prior to acquiring the company, Galton managed the flock for the previous owners.

After 26 years of making cheese in an old Shaker barn retrofitted into a creamery, Old Chatham this summer relocated from its original headquarters in Old Chatham, New York, to a brand new, 40,000-square-foot facility in Groton, New York.

“We finally have the opportunity to scale up new products that have been in development for a while,” says Max Sandvoss, national sales and marketing director, Old Chatham Creamery. “A lot of the market has really matured for artisanal cheese, but there is a limited supply of sheep milk being produced in America and a growing interest in goat milk products.”

• Expanding industry

New York’s cheese industry is expanding, both through new startups and expansions of existing companies, according to Nathan Pistner, president of the New York State Cheese Manufacturers’ Association and plant manager for Great Lakes Cheese in Adams, New York.

New York State Cheese Manufacturers’ Association members, which include both large and small companies and cooperatives, account for more than 90% of New York’s cheese production. The association works to support its members in making and selling high-quality cheese, offering education, promotion and annual spring and fall meetings.

“The New York state cheese industry has seen an influx in artisanal cheese production, especially toward the New York City area. It is one of the association’s goals to assist and support these ventures wholeheartedly,” Pistner says. “In addition, the larger companies continue to reinvest in their facilities and have an excellent working relationship with each other. There have been several large expansions over the past 10 years, including Great Lakes Cheese, Yancey’s Fancy and Upstate Niagara Cooperative to name a few.”

The biggest benefit and advantage for cheese production in New York is the milk supply, Pistner says, noting the quality of milk, dedicated labor force and favorable weather. He adds that the dairy industry has continued to adopt new disciplines in science and farming through periods of hardships and success, and there is a tradition of cooperation among cheese manufacturers.

“The future of the cheese industry in New York state is possible because of our strong history and foundation,” he says. “I would encourage anyone thinking of investing in a cheese factory to consider New York state.”

CMN


U.S. cheese production climbs 0.5% in July over previous year

September 6, 2019

WASHINGTON — Total U.S. cheese production, excluding cottage cheese, was 1.092 billion pounds in July, 0.5% above July 2018’s 1.087 billion pounds, according to data released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Dairy Production chart on page 14.)

July cheese production also was 2.3% above June 2019’s 1.067 billion pounds, but when adjusted for the length of the months July cheese production was down 1.0% from June on an average daily basis.
NASS reports production of Mozzarella, the nation’s most-produced cheese, was up 0.8% from a year earlier to 370.3 million pounds in July. Italian-type cheese production, of which Mozzarella is the largest component, totaled 465.9 million pounds in July, 0.7% above July 2018.

Production of Cheddar totaled 307.4 million pounds in July, down 5.5% from production a year earlier. American-type cheese production, of which Cheddar is the largest component, totaled 436.1 million pounds in July, 1.1% below July 2018.

Wisconsin led the nation’s cheese production with 282.2 million pounds produced in July, down 2.1% from its production a year earlier. California followed with 210.3 million pounds, down 0.4% from its production a year earlier.

NASS reports U.S. butter production in July totaled 142.7 million pounds, 6.0% above July 2018’s 134.6 million pounds. July 2019 butter production was down 1.5% from the previous month; when adjusted for the length of the months July butter production was down 4.6% from June 2019.

California led the nation’s butter production with 45.1 million pounds in July, 5.6% more than its production a year earlier.

Production of nonfat dry milk totaled 168.8 million pounds in July, NASS reports, up 12.4% from July 2018’s 150.2 million pounds. Production of skim milk powder, including protein standardized and blends, was 36.7 million pounds in July, down 22.7% from July 2018’s 47.5 million pounds.

CMN


Strong, steady demand boosts price of CME Cheddar blocks

September 6, 2019

By Alyssa Mitchell

MADISON, Wis. — The Cheddar block price at the Chicago Mercantile Exchange (CME), supported by steady demand and tightening block production, continues to inch toward $2 per pound.

Whether it will hit that mark is uncertain, analysts say. The July “Dairy Products” report released by USDA this week shows U.S. manufacturers are making less Cheddar, with production down 5.5% from last July. Wisconsin Cheddar production was down 2.0% in July, and production is down 9% in the Western region, the report says. (For more information, see related article in this issue and chart on page 14.)

In addition, U.S. American cheese stocks were nearly 6% below last year on July 31, according to the latest “Cold Storage” report, notes Mike McCully, owner, The McCully Group LLC, New Buffalo, Michigan. July total cheese stocks also declined for the first time during July since 2014, he adds.

“This helps explain the upward movement in cheese prices since this spring,” McCully says.

He adds that while exports are expected to be lower in the second half of this year given the premium U.S. cheese carries relative to other regions, domestic demand has been good and will improve with the upcoming fall holiday period.

The Cheddar block price at the CME reached $1.9975 per pound today, a high not seen since November 2014. Meanwhile, the Cheddar barrel price settled at $1.7425, widening the block/barrel spread to 25.5 cents.

John Newton, chief economist for the American Farm Bureau Federation, notes that for the better part of the last 20 years, block and barrel cheese prices have followed each other closely, with an average difference of 1 cent per pound, and milk pricing formulas essentially weighted them equally.

Since 2017, however, things have changed. Increased barrel cheese production has resulted in a widening price spread between block and barrel cheese.

“That spread is equivalent to a nearly $600 million reduction in dairy farm revenue over the past two-and-a-half years,” Newton says. “This divergence in block and barrel prices was likely unforeseen by the architects of the current milk pricing system two decades ago.”

The widening block-barrel spread is due to a variety of factors, Newton notes.

“First, growing milk supplies and tight processing capacity in some regions led to distressed milk being dumped or sold at a discount. Any of this milk that flowed into barrel cheese production likely increased supplies and contributed to lower prices. Continued barrel production in the face of low prices is made more sustainable depending on the magnitude of the price discount of milk going into the plant,” he says.

“Second, cheese exports — mostly blocks — have improved in recent years. Cheddar exports increased 43% in 2017 and then increased by 14% in 2018. The increased demand for block Cheddar cheese has increased the price relative to barrel cheese,” he adds.

Other factors also contribute to the wide price gap between blocks and barrels, including a reduction in processed cheese demand (i.e., barrels) and increased demand for white whey, a byproduct of barrel cheese production, he says.

Eric Meyer, president, HighGround Dairy, Chicago, says cheese prices may be at this price level for the next 60 or even 90 days, but the longer they stay elevated, the worse it could be from a pricing perspective into next year.

“We are very uncompetitive in the export market, which could have impacts into the first half of 2020,” he says. “I don’t see us lasting up here too long, but we’ll likely see markets at $1.80 into the $1.90s through October.”

USDA’s Dairy Market News notes some contacts previously suggested $1.80 block cheese market prices would hinder buying.

“Now that block prices approach $2 and buying is still active, the needle is surely moving, at least in the near term,” Dairy Market News says.

Meanwhile, CME butter continues to pull back, settling at $2.1725 per pound today.

Although butter markets have been mostly stable, they are in the low end of the range currently, says Dairy Market News.

“Undoubtedly, some reports have put pressure on market prices. Additionally, imports have increased from Oceania, and European Union butterfat is a bargain currently,” Dairy Market News says. “That said, butter markets have been a bastion of steadiness in 2018 and 2019, therefore contacts are reticent to suggest markets will slip from their range-bound position, at least in the near term.”

Sara Dorland, managing partner at Ceres Dairy Risk Management, Seattle, says as butter output continues to expand — along with higher imports and lower exports — stocks remain elevated.

Once the market determines butter holdings are adequate to meet holiday demand, prices may move lower, as they have in years past, she says.

“That said, lower prices could encourage demand, so prices could still make another run higher before the end of the year,” she adds.

Meyer agrees CME butter certainly has the potential to increase again, but “as bullish as the data is for cheese, it’s not for butter.”

He notes butter production was up in July and has been strong all year. Cold storage numbers are quite bearish, he adds.

“Every bearish data point we’ve seen makes us less confident that there’s a rally coming,” Meyer says. “We still believe that $2.20 is a price that’s relatively well supported, but we don’t know how much momentum we have to the upside.”

Other global market fundamentals may weigh on U.S. dairy prices as the fourth quarter approaches.

McCully notes markets don’t like uncertainty, and market factors like African swine fever, tariff disputes and Brexit are directionally bearish for dairy prices.

“While the supply side of dairy leans a bit bullish with tighter milk supplies in Europe and the U.S., global demand growth has eased and with an uncertain economic climate, buyers are more conservative in their approach to the market,” he says.

Dorland agrees, noting the U.S.-China trade dispute (see article in last week’s issue) is keeping U.S. exporters from participating in a growing market for cheese and milk powder.

“Overall, Brexit and the U.S.-China trade dispute have added a lot of uncertainty to the mix as the end of 2019 approaches — uncertainty is never good for markets,” she says.

CMN


New York state supports diverse dairies, award-winning cheese

September 6, 2019

Editor’s note: In our series, “From Cow to Curd: A Look Across the Nation,” Cheese Market News takes a look at the cheese and dairy industry across the United States. Each month we examine a different state or region, looking at key facts and evaluating areas of growth, challenges and recent innovations. This month we are pleased to introduce our latest state — New York.

By Rena Archwamety

MADISON, Wis. — New York may be famous for its Big Apple, but the state also is big on dairy as a top manufacturer, major farming state and renowned research and educational hub for the industry.

Leading the nation in yogurt production, New York manufacturers produced 690.3 million pounds of yogurt in 2018, according to USDA data. New York ranked fifth in cheese production in 2018, and currently the state stands third in cows and fourth in milk production.

New York has approximately 620,000 dairy cows across about 4,000 farms, which are concentrated through the Finger Lakes, western and northern regions of the state, with pockets in eastern New York which is close to the big-city markets, according to Tom Overton, professor and interim chair of Cornell University’s Department of Animal Science and director of the PRO-DAIRY program, which assists the state’s dairy producers.

“Forage quality and availability are pretty good in the Northeast. Generally water availability is another strength,” Overton says. “We continue to have lots of regulation around labor and the environment, but overall, New York is a pretty good place for cows, with both its land base and forage and feed quality.”

• Supporting dairy

New York’s dairy industry enjoys a strong support network through programs directed by staff at Cornell University, Ithaca, New York.

PRO-DAIRY is a state-funded initiative that started in the mid-1980s and helps New York’s dairy farmers and agribusiness professionals by providing research, educational programs and access to dairy industry specialists and consultants. A couple of PRO-DAIRY’s current programs include its newly expanded Dairy Advancement Program, which helps farms with up to 700 cows engage with private-sector consultants for business planning, development and production techniques, and the Junior Dairy LEADER program that helps direct high-school age youth to careers in agriculture and dairy.

“The PRO-DAIRY program has been long-standing and very effective over time, one our farms really count on having access to,” Overton says. “I’m not aware of anything like it. Other states have dairy extensions, but as far as a cohesive program that runs along different sectors and specialty areas, it is unique.”

On the dairy manufacturing side, faculty and extension staff from the Cornell Department of Food Science and its pilot plant help the industry develop new products, improve quality, devise food safety plans and solve problems. Dairy businesses also can benefit from the department’s research and an extensive array of workshops held in locations across the state.

“We’re one of about 25 universities in the country with a dairy component, and as a land-grant university, we provide outreach and training to the dairy industry as a whole,” says Rob Ralyea, senior extension associate and pilot plant manager, Cornell Department of Food Science.

Cornell’s dairy plant also has an incubator program for those looking into entering the dairy business who are not sure yet if they want to invest in a plant and equipment. These businesses can sign a year or 18-month contract to help develop a product and get it off the ground.

“We support the dairy industry in New York in just about every way possible,” Ralyea says, adding that the department can help companies with a wide range of products. “In New York, the dairy industry is very diversified, and we carry that expertise across the board.”

New York has a diverse array cheese and dairy manufacturers, from small farmstead operations, to award-winning specialty cheese crafters and affineurs, to leading national and international brands.
There are 360 licensed dairy processors in the state, Ralyea says, estimating that production volume is roughly divided into 30% fluid milk, 30% cheese, 20% yogurt and 20% other dairy products.

Stewart’s and Byrne Dairy are a couple of New York’s largest milk processors. Yogurt giants Chobani and Danone North America are headquartered in the state. Kraft Heinz, Sorrento Lactalis and Great Lakes Cheese are among the major cheese companies with plants in the state, along with well-known specialty brands like Yancey’s Fancy and McCadam Cheese. New York also is home to pioneering sheep and goat milk cheesemakers Old Chatham Creamery and Coach Farm.

• Cheese collaborations

In August, New York cheeses took both Best of Show and Second Best of Show at the American Cheese Society’s 2019 Judging & Competition in Richmond, Virginia.

The top two cheeses both were made by Old Chatham Creamery. The champion Stockinghall is a collaboration with Murray’s Cheese, which matures Old Chatham’s Cheddar in Murray’s Long Island City caves. The first runner-up Professor’s Brie is a collaboration between Old Chatham and Wegmans Food Markets, aged in Wegmans’ Rochester, New York, caves.

Murray’s Cheese, which has been a fixture in New York City’s West Village since 1940, started out selling mostly Italian cheeses and now is known for its high-quality selection of U.S. and imported cheeses. In 2004, Murray’s opened an affinage space in the basement of its retail shop, and in 2014, it expanded its affinage space to its current location at its distribution center in Long Island City.

“Murray’s Cheese has collaborated with over a dozen cheesemakers, both domestic cheesemakers and several producers from France, Switzerland, Spain and Italy,” Steve Millard, senior vice president of merchandising and operations, says of Murray’s affinage partnerships. “Our experience has been very positive with the cheesemakers that we work with.”

New York cheesemakers Old Chatham Creamery and Four Fat Fowl have worked with Murray’s on cave-aged cheeses. Millard notes that Murray’s Cavemaster Reserve Stockinghall is a collaboration resulting in a 100% New York clothbound Cheddar.

“The cheese is made from Old Chatham milk at the Cornell extension pilot plant, sent to our caves in Long Island City and then bandaged and coated in New York state pastured pig lard,” he explains. “It is our intention and our desire to support our local producers, and we are proud of our 80 years selling cheese in New York City and the evolving landscape of cheesemakers in New York state.”

About five years ago, former Cornell University Animal Science Professor and PRO-DAIRY Director David Galton purchased Old Chatham Creamery (which was then named Old Chatham Sheepherding Co.) from its original owners. Prior to acquiring the company, Galton managed the flock for the previous owners.

After 26 years of making cheese in an old Shaker barn retrofitted into a creamery, Old Chatham this summer relocated from its original headquarters in Old Chatham, New York, to a brand new, 40,000-square-foot facility in Groton, New York.

“We finally have the opportunity to scale up new products that have been in development for a while,” says Max Sandvoss, national sales and marketing director, Old Chatham Creamery. “A lot of the market has really matured for artisanal cheese, but there is a limited supply of sheep milk being produced in America and a growing interest in goat milk products.”

• Expanding industry

New York’s cheese industry is expanding, both through new startups and expansions of existing companies, according to Nathan Pistner, president of the New York State Cheese Manufacturers’ Association and plant manager for Great Lakes Cheese in Adams, New York.

New York State Cheese Manufacturers’ Association members, which include both large and small companies and cooperatives, account for more than 90% of New York’s cheese production. The association works to support its members in making and selling high-quality cheese, offering education, promotion and annual spring and fall meetings.

“The New York state cheese industry has seen an influx in artisanal cheese production, especially toward the New York City area. It is one of the association’s goals to assist and support these ventures wholeheartedly,” Pistner says. “In addition, the larger companies continue to reinvest in their facilities and have an excellent working relationship with each other. There have been several large expansions over the past 10 years, including Great Lakes Cheese, Yancey’s Fancy and Upstate Niagara Cooperative to name a few.”

The biggest benefit and advantage for cheese production in New York is the milk supply, Pistner says, noting the quality of milk, dedicated labor force and favorable weather. He adds that the dairy industry has continued to adopt new disciplines in science and farming through periods of hardships and success, and there is a tradition of cooperation among cheese manufacturers.

“The future of the cheese industry in New York state is possible because of our strong history and foundation,” he says. “I would encourage anyone thinking of investing in a cheese factory to consider New York state.”

CMN


U.S. cheese production climbs 0.5% in July over previous year

September 6, 2019

WASHINGTON — Total U.S. cheese production, excluding cottage cheese, was 1.092 billion pounds in July, 0.5% above July 2018’s 1.087 billion pounds, according to data released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Dairy Production chart on page 14.)

July cheese production also was 2.3% above June 2019’s 1.067 billion pounds, but when adjusted for the length of the months July cheese production was down 1.0% from June on an average daily basis.
NASS reports production of Mozzarella, the nation’s most-produced cheese, was up 0.8% from a year earlier to 370.3 million pounds in July. Italian-type cheese production, of which Mozzarella is the largest component, totaled 465.9 million pounds in July, 0.7% above July 2018.

Production of Cheddar totaled 307.4 million pounds in July, down 5.5% from production a year earlier. American-type cheese production, of which Cheddar is the largest component, totaled 436.1 million pounds in July, 1.1% below July 2018.

Wisconsin led the nation’s cheese production with 282.2 million pounds produced in July, down 2.1% from its production a year earlier. California followed with 210.3 million pounds, down 0.4% from its production a year earlier.

NASS reports U.S. butter production in July totaled 142.7 million pounds, 6.0% above July 2018’s 134.6 million pounds. July 2019 butter production was down 1.5% from the previous month; when adjusted for the length of the months July butter production was down 4.6% from June 2019.

California led the nation’s butter production with 45.1 million pounds in July, 5.6% more than its production a year earlier.

Production of nonfat dry milk totaled 168.8 million pounds in July, NASS reports, up 12.4% from July 2018’s 150.2 million pounds. Production of skim milk powder, including protein standardized and blends, was 36.7 million pounds in July, down 22.7% from July 2018’s 47.5 million pounds.

CMN


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Today's Cheese Spot Trading
September 20, 2019


Barrels: $1.6550 (-1)
Blocks: $2.0500 (+1/2)


Click here for more market activity
Cheese Production
U.S. Total July
1.092 bil. lbs.


Milk Production
U.S. Total August
18.280 bil. lbs.

Guest Columnist

A producer’s perspective

Ryan Yonkman, Rice Dairy

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