The cheddar cheese market had a much firmer start to the year than anticipated.

Cheese blocks are in the range of $185 a pound to $1.90 a pound, and barrels are trading in the $1.85 a pound range.

“I suspect that we’re in a position where we’ve had some pretty good exports to start the year and that‘s tightened the cheese market up to some extent, the cheddar market in particular,” said Kathleen Noble Wolfley, marketing intelligence director at Ever.Ag.

That’s left a little less supply available to the marketplace, keeping a little bit of a short squeeze on prices and sending values a bit higher, she said

But higher prices might not last, given a lot of new cheese capacity that’s ramping up very quickly.

New capacity

Over the course of the last three months, Hilmar investment in Dodge City, Kan., and Great Lakes Cheese in Franklinville, N. Y., started ramping up. Valley Queen in Milbank, S.D., and Leprino in Lubbock, Texas, are taking in more milk.

Between those four investments, there is a significant amount of additional cheese supply that’s expected to come on the marketplace in a very short amount of time.

“Our expectation is that we could see somewhere around 20 million pounds of milk (per day) moving into these cheese facilities by midyear. That’s a lot of cheese potentially that could be moving into the marketplace that wasn’t being produced last year,” she said.

Those cheese plants aren’t the only investments. Between 2024 and 2026, a pretty substantial investment in dairy production in the U.S. is expected, she said.

More milk

“That is going to demand more milk supply and part of the reason why I suspect that we’ll see pretty substantial growth, because producers are seeing the opportunity to grow into some of these facilities,” she said.

The big question is where’s all that cheese going to go.

It’s a substantial amount of product that’s coming online compared with domestic demand growth. So there is an expected mismatch in 2025 that could pressure the market.

“Domestic demand may be one bucket where that additional product may go. However, I would say that over the course of 2024, domestic demand really struggled,” she said.

Restaurant sales aren’t doing all that well, and retail sales have only increased a little, she said.

“It’s going to be hard for … extra cheese to find an outlet in the domestic market unless we see a turnaround in domestic demand,” she said.

Cheese exports

Some of the cheese could go into stocks, which were down on a year-over-year basis in all of 2024. So there is some buffer opportunity that some of the cheese could go to fill some of that gap.

The big area for additional cheese is exports.

“We exported a ton of cheese in 2024,” she said.

That’s not a big surprise because the U.S. was super competitive on pricing in the September/early October timeframe. But U.S. prices have been creeping up and are sitting at a premium in the global market

“That could stall out some of our export efforts … as we get into the later Q1, Q2 timeframe,” she said.

But the export market will have a key function in finding an outlet for new cheese that’s coming online.