US Cheese Prices Fall as Foodservice Demand Weakens
Wholesale cheese prices in the United States recorded a sharp decline as demand from restaurants weakened and supply remained high. The Chicago Mercantile Exchange’s spot block Cheddar price dropped below $1.30 per pound in late September. The monthly average was just under $1.40 per pound, compared with a five-year September average of about $1.90.
Stocks of natural American cheese in domestic cold storage reached 815.5m pounds in August. That was 0.5% higher than a year earlier and marked the first annual increase since January. The figure indicated that cheese production was running ahead of purchases by retailers and foodservice businesses, according to the source report.
Traffic at national quick-service restaurants fell by 1.3% in the first seven months of 2026. The report linked the reduction to household spending pressures across groceries, healthcare, utilities and motor fuel, which led consumers to prepare more evening meals at home. The University of Michigan’s Consumer Sentiment Index stood at 48.1 in September, the second-lowest reading since the survey began in 1952.
American cheese output declined by 0.1% during the first eight months of the year, but remained high after production reached a record in 2025. Cheese vats continued to operate at elevated rates, while restaurant, retail and wholesale replenishment orders did not absorb the available volume. This left additional curd supplies in commercial warehouses.
Freight costs also reduced buyers’ willingness to purchase cheese on the spot market. CME pricing includes a freight allowance of 4.93 cents per pound, while transport from western processing plants exceeded 15 cents per pound amid high diesel prices. Buyers sourcing cheese from the West Coast therefore faced a transport shortfall of roughly 10 cents per pound. Packaging, plastic film and palletising materials became more expensive as well, raising the delivered cost of the product.
Lower Cheddar prices have affected the finances of processors and dairy farmers. Plants operating pasteurisation and block-forming lines faced narrower margins as wholesale returns fell below manufacturing and milk-handling costs. Maintaining 815.5m pounds of cheese in cold storage also required refrigeration, insurance and inventory financing. For producers, the effect extends to Federal Milk Marketing Order Class III milk payments, which are linked to cheese prices. Farmers were also dealing with higher diesel, fertiliser and short-term borrowing costs during the autumn forage harvest. The figures were reported by Dairy Herd.
