The oil glut is not the only commodity that concerns investors in the U.S. because of an over-production problem. America also has a cheese glut and it is continuing to pile up. In fact, the U.S. has the largest glut of cheese in over 30 years, resulting in dropping prices in the commodities market.
The U.S. is experiencing a cheese glut as a result of an increase in imported cheeses, causing some of the lowest cheese commodity prices in years. Erbs55 / Pixabay
What is causing the excess build-up of cheese? Part of the problem is that Americans love imported cheese and the European Union increased their cheese shipments to the U.S. by 13 percent last year. In addition, the E.U. butter exports increased by 27 percent, threatening the U.S. with a glut in that product, as well.
In addition, despite the increase in imported cheese, American farmers have continued to produce cheese at the same levels, which means large quantities of domestic cheese are being stockpiled. The chart below shows how much our stockpile of cheese has grown since 1988, according to the USDA.
As happens in any commodities market, whenever there is an excess of a product, it causes lower prices. Raw milk prices in Europe have fallen to their lowest level since 2010, creating difficulties for struggling European farmers.
However, the situation in the U.S. is also worrisome. American cheddar cheese is traded on the Chicago Mercantile Exchange and its price was trading at a five year low this past week. Even more concerning is the fact that the situation does not appear to be getting better, since stockpiles of cheese are continuing to grow.
With butter exports to the U.S. also up significantly, the U.S. could soon have another glut to deal with.
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