TOKYO -- Cheese and butter import prices are climbing as exporting nations in Oceania and Europe curtail production of raw milk, while the yen's weakness against the dollar could eventually have a ripple effect on domestic retail prices.
Australian and New Zealand cheddar cheese prices covering the first half of 2017 soared to around $4,200 a ton, up 20% from the second half of 2016, in recent negotiations between Japanese trading houses and major overseas dairies. Gouda prices climbed nearly 30%, also to $4,200 a ton, the first time in three years that prices have risen for both.
Imports account for nearly 90% of the cheese that is consumed directly, and for more than 70% of the raw material for processed cheese. Major dairies such as Megmilk Snow Brand and Meiji Holdings use it primarily as an ingredient in processed cheese.
Producers have generally not moved to pass along the higher costs, as a Megmilk official says only that they are "considering how to respond." But continued increases in import prices likely will have an effect on consumers.
Butter import prices, which are managed by the government, also have risen since the end of 2016. Simultaneous buy and sell, or SBS, bidding conducted Thursday by independent administrative agency Agriculture & Livestock Industries yielded an average import price of 787,702 yen ($6,980) per ton, more than 50% higher than a year earlier.
Lower butter and cheese import prices from spring 2015 to summer 2016 prompted producers in the European Union, New Zealand and Australia to cut output amid deteriorating earnings. International dairy product markets then rebounded. The Global Dairy Trade price, an indicator of the international cheddar cheese market, has risen 30% since July. Butter GDT prices have climbed 70% in the same period.
The U.S. Department of Agriculture forecasts only a 0.3% rise in raw milk production this year in the EU, and a 1% increase in New Zealand. Solid global demand offers no reason for the international market to drop.