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$3/pound cheese?

I think most of us pay “over block” on last weeks average on the cash market. Do cheese futures prices move the cash market or does the cash market move the futures market?
 
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There were no trades today on the cash-settled block cheese market that most of us are priced on:

http://www.cmegroup.com/trading/agricul … tcall.html

This is a very thinly traded market.

There were futures contracts sold today. However, these are tools the “big guys” or professional traders use to hedge risk many months into the future. It is my understanding that the cash settled block market affects what we all pay for our cheese. it is also a big influence on the milk futures market as well as the cheese futures market. All of this power for a market with two trades in the last 40 days.
 
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Registered Guest:
Perfect - Where are you getting the info that there were only 2 trades? And 2 trades of what?

I’m not sure what the cheesereporter is reporting exactly - but if you go to the CME website and look at the cheese futures, you will see that more than 2 trades have taken place recently. And that futures market is where the price comes from.
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perfect pizzas:
It appears to me that two truckloads traded on 1/24/14. This would appear to be the only trade on the block market in 2014.

http://www.cheesereporter.com/pricedetails.htm

Prior to that, the most recent trade appeared to be on 12/20/13.

http://www.cheesereporter.com/Prices/20 … etails.htm
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You guys are looking at two different markets. The price is set from the spot-call market, not the futures market.

Futures: http://www.cmegroup.com/trading/agricul … heese.html
Spot-call: http://www.cmegroup.com/trading/agricul … tcall.html

Looking at the futures contracts, the market is in “backwardation” - the futures price is less than the spot price. If you want to hedge your cheese prices for the year, you can buy the Feb15 futures contract and you can lock in a price of 1.80 (plus your over block price to the distributor) on 20,000 pounds. I think the initial margin requirements would be around $4,000.
 
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Piper, how do you get $1.80 on a 14Feb contract? All I see are options.

Edited…

Disregard, I see you were talking about 2015. sri.
 
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pizza2007:
CME up another penny to $2.32/lb. I hear propane is at record highs up there in cheese country. Perhaps that’s the relationship…
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Um, Yeah propane is outrageous!

yesterday morning it was posted at $8.25/Gallon, It is typically around $1.25/gallon
We’ve been seeing fluctuations up to $3.00 in a single day. And the sub-zero temps we are experiencing are not helping either.

So, we did a special with a large (16") 1-topping pizza for the same posted cost as a gallon of propane on each day. We’ll quit that when the prices dip below $5/gallon
 
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An alternative to raising prices would be to sell other baked goods which don’t require cheese.

John Arena from Metro Pizza gave a great talk at the IBIE a few months ago about how pizzerias and bakeries are a natural fit since pizzerias already have all the ingredients and equipment to make artisan bread. Some pizzerias are a full-fledged bakery in the morning with muffins, pastries and croissants which bring in a breakfast crowd and effectively keeps their store running the whole day.

Loaves of bread is a good way to begin though. With the right touches you can make your bread very artisan, justifying a higher price. E.g. rosemary and sea salt focaccia, 7-seed whole wheat, Mediterranean olive bread…

This creates a whole new appeal to your customers and maybe even bring in some new folks. Plus, it’ll be way tastier than the store bought stuff!
 
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