Why this year’s epic surge in lumber sent cheese prices to a 15-month low

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Cheese prices are sitting at a 15-month low and lumber is partly to blame, thanks to the quirky price dynamics of the cheese industry, Bloomberg first reported on Thursday.
As lumber has soared this year, some enterprising cheesemakers are adapting to the high prices by using barrels instead of wooden boxes.
But cheese barrels aren’t quite the keg-shaped wooden vessels one might imagine.
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Cheese prices are sitting at a 15-month low and lumber is partly to blame, thanks to the quirky price dynamics of the cheese industry, Bloomberg first reported on Thursday.
As lumber has soared this year amid a real-estate building boom, many wood products – including the wooden boxes cheese blocks usually ship in – have become prohibitively expensive to produce. So some enterprising cheesemakers are adapting to the high prices by using barrels instead of boxes, according to Bloomberg.
But now there’s a glut of processed cheese swamping the market, sending prices as low as $1.31 per pound for a 500-pound barrel – the lowest since 2020, per Bloomberg.
To understand why, start with cheese barrels, which aren’t quite the keg-shaped wooden vessels one might imagine. When it comes to cheese, a barrel is more akin to "a plastic bag and a corrugated box with multiple dimensions," Ohio-based cheesemaker Kurt Epprecht told Hoard’s Dairyman, a trade publication.
These quarter-ton, vacuum-packed "barrels" store mostly processed cheese, like Kraft Singles, whereas the wooden boxes usually contain massive blocks of unprocessed cheese.
Much like toilet paper – split into separate commercial and consumer segments – box and barrel cheese producers don’t often mix. Barrels can be dangerous without proper equipment, Epprecht said, so cheese plants usually prefer to specialize.
"Twenty years ago, there were probably 15 plants that produced both blocks and barrels," cheese trader Ted Jacoby told Hoard’s Dairyman. "Today, I think there’s three."
But the flipside of the cheese-barrel glut has been a small but significant cheese-box shortfall. Since the start of 2021, prices for a 640-pound cheese box on the Chicago Mercantile Exchange have climbed around 10%, according to data from Cheese Reporter.
The multi-month low for cheese comes less than a year after the commodity was at all-time highs, after pandemic-era contract obligations collided with renewed restaurant demand for some cheesy goodness.
Read more: Kumar Sadaram bought his first rental property in 2012 and now owns more than 50 homes. He breaks down the strategy that finally propelled him to financial independence – and shares 3 ways to get started in real estate with little to no money.
Read the original article on Business Insider

Source: https://www.businessinsider.com/lumber-cheese-price-today-cme-wood-barrel-box-real-estate-2021-08

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