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Relatively good news from the cheese market

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paul7979

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The block market dipped below $2 per pound today for the first time since July. While $2/Lb is historically very high, it’s a whole lot better than the $2.40+ records we saw in September. Let’s hope we continue to see it fall. I’d be thrilled to see it go to the $1.60’s but I doubt that will happen anytime soon.

http://www.cheesereporter.com/prices.htm
 
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Production is way up on all dairy products. Its up like 10% over last year and 2015 is looking real good for us according to a report. They are expecting 26 billion lbs of milk production for next year. That’s 6 billion up from 2014. That report sparked the crash on Tuesday. They are expecting around $17 per 100 lbs of milk for 2015 which should place the cheddar market at around $1.70 and our cost around $2 lb for next year. There has been a lot of scuttle but in the dairy market the last couple months about high production and reduced demand. It should play out well for all of us. We are due for a low cheese price year.
 
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rumor has it many of our core pizza items will begin to head south as 2015 starts. Pork and Beef should also be on the rebound. Not sure about wheat. Leprino speculates the cheese market to level off at 1.75 as we hit spring/summer. Fingers crossed as I am trying to build a new store to move my big boy into in March, so I need the extra $ (plus having to pay for Obamacare since I am a LARGE EMPLOYER now.)
 
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It has dropped to $1.80 today. Ahh, sweet relief! I’m in the middle of putting in a 2nd price increase for the year too, so this should combine to produce Income Statement sanity again.
 
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How low will it go??? Closed at $1.73 which to me equates to $3500 extra to the bottom line ($14 x 30# cases x 250 cases a week in my 3 shops combined). My case of cheese will be $73.48!
 
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ya I’m going to be paying 1.93 next week blows my mind

Dale i can’t figure out your math on that?? how do you go threw 250 cases a week??
thats 7500lbs a week in cheese of you burn threw 250, 30lb cases
 
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jokergerm said:
ya I’m going to be paying 1.93 next week blows my mind

Dale i can’t figure out your math on that?? how do you go threw 250 cases a week??
thats 7500lbs a week in cheese of you burn threw 250, 30lb cases
Click to expand...
You’re right my math was wrong - I doubled it somehow. should be 125 cases…still close to $2000 in MY pocket.
 
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Prices on the cheese market have continued to fall. How long does this usually take before we start to notice on our orders? Prices have dropped greatly over the past month, but my cost from my supplier has changed minimally over that time. Does it usually take a little time for the market to react or am I not getting the best price from my supplier? I’m currently using pre-shredded cheese, if that makes a difference.
 
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Joe,

The only way to know for sure is to ask your supplier how they price your cheese, and then let them know you monitor the market and will call them on it when prices aren’t in line. If they dance around the question, start shopping for a new vendor because otherwise your prices will go up much faster than they come down.

Our price is drags 3 weeks behind the market and is a set amount above the block.
 
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From our suppliers (Sysco & US food) it generally takes 2-4 weeks. They do not lower prices until the stock they are delivering was purchased at lower prices. If they got ahead of themselves on buying it can take a while. Often one shows changes a week or more before the other.

We are seeing prices drop 10-15 cents a week right now and I expect that to be the case until the prices get to about $1.85 around new years when the changes should be smaller and slower unless the market continues to fall.

A lot of operators on here seem to be able to get down to prices less than 20 cents above block, but our pricing seems to be more like 15% above block. We get down to 20 cents when the price is low but more like 30 cents above when prices are high.

Our quoted prices have dropped from about $2.70 to $2.30 and will get to $2.15 next week, $2.00 and then $1.85 I guess. We never actually had to pay the $2.70 because we stocked up when I saw the prices climbing and we are keeping inventory as low as possible right now since each brings a lower price!

I have also learned over the years that having two suppliers goes a long way to keeping them honest on prices. We shop the cheese price every week.
 
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We have a 6 day lag. The average price from the previous week we get the following Thursday. We pay .29 over market so cheese checked in today at $1.94. Our food cost have dropped 4% since September.
 
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Thanks for the feedback. This supplier has been consistently lower than my other supplier on almost everything we have delivered. We have been trying to work into shredding our own anyway. The savings would be huge and I would feel more comfortable knowing what I’m actually getting. Plus in the small sample runs we’ve done, it just tastes better. Thanks again.
 
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I noticed a decrease in cost from my cheese supplier immediately.
But there may be a reason I noticed it so rapidly too.
Our cheese supplier is a dairy specific supplier (Vern’s Cheese) who purchases direct from the manufacturer (Grande) and they are only about 2 hours from each other.

The way that I understand commodity items is that you must price your product at what it will cost you to replace your stock as opposed to what you paid for it in the first place.

Lets use gasoline as an example, we’ve all seen that the price at the pumps can sometimes change daily, even though they may only get fuel delivered once a week. The gas station changes their price according to current market, and what it’ll cost them to replenish their stock on hand.

Now lets throw that all out the window in many cases, because everyone tries to make as much money as they can, and prices are always slower to drop than they are to rise. I bet if the market showed a sudden rise, we’d all see our prices rapidly go up, right?
 
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Actually we have the same lag in price increases; about three weeks from when I see it go up until the price shows up on our vendor price list and they definitely price from their cost of current inventory, not from replacement cost.
 
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What are you guys paying for a block of Grande Mozzarella Cheese or should I say a pound? I’m on the east coast PA.
Thanks
 
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Here in Puerto Rico the Cheese block is $2.95 per pound, the price its going up, I think we need to get together all pizzerias and be a our own distributor, its the price goes up, never goes down. Pirates!
 
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