Russia has committed fromagicide.
Our (vastly simplified) story can start with Russia’s policy in Ukraine. Next we had trade restrictions from the U.S., EU, Australia, Canada and other nations. Then Russia responded with new trade rules that banned a long list of imports. But still some illicit cheese made it through their embargo. So Russia destroyed thousands of tons of cheese:
Where are we going? To the U.S. cheese glut.
The U.S. Cheese Glut
Yes, Russia is importing much less cheese:
As a result, EU cheesemakers hoped to increase their U.S. sales. You can see below that EU cheese and butter exports to the US have increased considerably:
But also, making our cheese less attractive in world markets, the dollar has been strong:
Combine the Russian embargo, EU cheese exports, increased U.S. cheese production, a stronger dollar and you get a U.S. cheese glut.
Our Bottom Line: The Power of the Market
Our story has omitted a lot of the world. But even this small piece of the cheese market is global.
- demand shrinks from Russia
- strong dollar makes U.S. cheese more expensive in world markets
- supply of EU cheese in U.S. increases, especially with the Russian embargo
- U.S. milk production soared after milk prices increased in 2014. More milk led to more cheese.
It looks like cheese prices should be way down. However, the U.S. government said it would purchase 11 million pounds of cheese–worth maybe $20 million–and give it to food banks. Just a whiff of government intervention appears to be why cheese prices rose during the summer according to BusinessInsider.
I suspect though that the power of the global cheese market will return.