There are more than 1 000 types of cheese available in the world, the chances are excellent that cheese will put a smile on the faces of millions of people all over the world. Barring, vegans, people who are lactose-intolerant, and cheese-haters.
Quick Overview of Cheese
✔️An overview of cheese as a commodity
✔️The history of cheddar cheese
✔️The production of cheddar cheese
Trading cheddar cheese as an agricultural commodity
What are the drivers of the price of cheese as a commodity?
The uses of cheddar cheese
An overview of cheese as a commodity
Although the source of the following saying about cheese is unknown, it is a true description of the product’s importance in the world: ‘You can’t make everyone happy. You’re not cheese.’
Charles de Gaulle (1890 – 1970), a former president of France, once jokingly complained about France, asking, ‘How can you govern a country which has 246 varieties of cheese?’
Thankfully, trading cheese as a commodity does not involve the problem of numerous variations of cheese, because the price of cheese as a commodity is based on US domestic cheddar cheese.
Hence, this article focuses only on cheddar cheese as an agricultural commodity.
Agricultural commodities refer to any crop, or part thereof, or animals, or animal products, produced or raised for sale on commodity markets. There are six types of agricultural commodities, namely:
- Dairy, for example, cheese and milk.
- Grains such as corn, wheat, oat, and rough rice.
- Meat, including cattle, pork bellies, and lean hogs.
- Oilseeds like canola, palm oil, and soybeans.
- Soft commodities such as cocoa, frozen concentrated orange juice (FCOJ), coffee, tea, and sugar.
- Miscellaneous agricultural commodities, including rubber, wool, and lumber, also referred to as timber, which is wood that has been processed into beams and planks of different lengths.
Cheddar cheese derives its name from the English village of Cheddar in Somerset, the place where the cheese originated around the twelfth century.
Characteristics of cheddar cheese:
- Colour
The natural colour of cheddar cheese is not orange but creamy or pale yellow (off-white). The orange colour associated with cheddar is created by adding a natural dye, called annatto, to the cheese. Annatto is an odourless dye that is made from the seeds of the achiote tree, commonly called the lipstick tree.
- Flavour
The flavour of the cheese is not determined by its colour (white or orange) but by how long it is aged. Aging is the only difference between mild and sharp cheddar cheeses. The longer the natural aging process, the sharper and more distinct the Cheddar flavour becomes.
Young cheddar normally smells milky and mild. Aged cheddars can have a sharply strong, earthy aroma.
Depending on the aging period, cheddar cheese comes in varieties of:
- Mild cheddars – aged from 2 to 6 months.
- Sharp cheddars – aged from 7 to 12 months.
- Extra sharp cheddars – typically aged up to two years, although, some cheddars are aging 10 years or longer.
- Texture
Cheese is often classified in terms of texture, ranging from soft to semi-soft and semi-firm to hard. Typically, the longer the aging process, the lower the moisture content of the cheese and the harder it becomes.
Wisconsin Cheese describes the texture of young cheddar as ‘slightly buttery, moist, and a little melty,’ and aged cheddars as nuttier and crumblier.
- Taste
The taste of young cheddar cheese is mild, creamy, and smooth, while aged cheddars have a sharp taste.
- Nutritiousness
Cheddar cheese is rich in protein, calcium, and zinc, and an excellent source of vitamins A, B2, B12, and K, which are important for heart and bone health.
The history of cheddar cheese
Tracing the origin of cheddar milk takes us back to the twelfth century to a small village by the name of Cheddar, located in the southern foothills of the county of Somerset in southwestern England.
The village of Cheddar had the benefit of nearby caves that provided the ideal temperature and humidity for the aging cheese.
Allegedly, a milkmaid took a pail of milk to one of the caves to keep it cool but forgot about it. When she returned after a while, the milk had hardened, and she decided to eat it and supposedly liked it.
Historically, cheeses were named for their origin rather than the method of production. Hence, the milkmaid’s discovery was named after the nearby village of Cheddar. Keep in mind, it was not the cheese we know today, it was just a cheese that came from the village Cheddar.
The cheese from Cheddar became a much-desired delicacy for the British royalties. For example:
- In 1170, King Henry II bought over 10 000 pounds of it, calling it a lifetime supply.
- Queen Victoria received a half-ton wheel of cheddar cheese as a wedding gift in 1840.
English immigrants brought their passion for and knowledge about cheddar cheese to Wisconsin in the USA in the early 1800s.
Before the mid-1800s, cheesemakers were compelled to get rid of wheels of cheese because of the soggy texture, rotten centres, and uncontrolled mold growth. Weight loss of cheddar was another problem cheesemakers had to deal with.
In order to counteract the problems involved in the production of cheddar, different techniques were introduced in the mid-1800s. Firstly, it was common practice to salt the rind, then butter it. The availability of cheap cotton enabled cheesemakers to wrap the cloth around the cheese and coat it with lard, creating excellent protection.
Furthermore, a number of scientific and technological improvements were initiated to improve the quality of cheddar. For instance:
- The ‘cheddaring’ process, is a technique used to remove whey from the curd, making the cheese dryer, more durable, and less prone to organic decay.
- The ‘scalding’ process is where the curds are heated to quickly get rid of the moisture.
- The cheese mill breaks up the curd blocks, and curd salting adds flavour and helps to dry and shrink the curds, and to stop fermentation, preventing the cheese to burst during aging.
Although various individuals contributed to the improvement of cheese-making techniques, Joseph Harding (1805 – 1876), an American businessman and politician, is credited ‘for putting together these technical improvements and combining them with rules for timing, temperature, and acidity to create a recipe that produced consistently good cheese,’ according to Saveur, a gourmet, food, wine, and travel magazine.
Put differently, Harding invented the ‘definite formula’ for the production of cheese, allowing cheddar to become the world’s favourite cheese. Deservedly, Harding is called the ‘father of Cheddar cheese.’
Also, in the mid-19th century, cheesemakers in the USA, England, and Canada started to collect and compare their best cheesemaking practices, systematizing the production of cheddar.
Over the next few decades, cheddar became a staple food across the United States and in other countries such as England. In the mid-19th century, cheddar became the most common cheese produced in the USA and remained so for a century and a half.
The production of cheddar cheese
Cheddar cheese is particularly suitable to meet the requirements for mass production, storage, and transportation.
The production of cheddar begins like almost every other cheese and comprises the same basic steps.
Cheese producers start the production by adding rennet, the contents of the stomach of an unweaned calf, to cow’s milk. The enzyme in rennet hugely helps in the coagulation of the milk, transforming it to a more solid substance.
In the next step, the watery milk, called whey, is separated from the curd (milk solids). After the curd is cooked and stirred, it goes through a process called ‘cheddaring’ where the cheese is cut into slabs that are repeatedly placed atop of one another and turned. The cheddaring process removes the final remains of the whey, acidifies the curd, and gives the cheese its unique, elastic structure, and sharply, strong flavour.
Salt is now added, approximately 2 percent by weight, to the curd. Salt is essential in the making of cheddar cheese because it helps to destroy harmful bacteria and other fungi growth. It is also essential in the development of a natural rind.
The curd is now pressed into molds in which the cheese remains for three to twelve hours, depending on the size of the molds.
The final step in the production process is the aging of the cheese which takes place in a controlled location to maintain an acceptable level of moisture. The aging period can vary between two months to ten years, depending on which type of cheese (mild, sharp, or extra sharp) the cheesemaker plans to make.
Nowadays, most cheddars are aged in wax or plastic, a more efficient method to protect the cheese.
Top global producers of cheese
The following five countries are the top producers of cheese in the world: the United States of America, Germany, France, Italy, and the Netherlands.
The combined cheese production of the 27 countries making up the European Union (EU) is more than the USA’s production.
Trading cheese as an agricultural commodity
To trade cheese as an agricultural commodity you are required to make use of the services of a regulated commodity broker or brokerage.
Cheddar cheese is classified as a dairy agricultural commodity and its price is based on US domestic cheddar cheese, according to Trading Economics.
Cheese future contracts and cheese options
Since 21 June 2010, cheese future contracts also called cheese futures, and options can be traded on the Chicago Mercantile Exchange (CME).
A Cheese Future Contract (CSC) represents the equivalent of 20 000 pounds of cheddar cheese and the tick size of $0.001 per pound.
Basically, a cheese future allows a trader to pay a supplier a specific price for a 20 000-pound (9-tonne) block of cheese at a future date. Traders are making bets on trends in cheese prices. Contracts are settled in cash.
Cheese future contracts were originally requested by producers and processors of cheese as a trading instrument to hedge their risk profiles.
Cheese options allow an investor or trader the right but not the obligation to buy or sell a block of cheese at a specific price on a predetermined date, called the expiry date. Holders of cheese options are protected against adverse price movements without losing the benefits from favourable price movements.
Cheese manufacturing companies
Another trading possibility is to buy shares of cheese manufacturing companies. More information about such companies can be obtained from your chosen commodity broker.
End of May 2025, Zippia provided the following list of the ‘Top 12 largest cheese manufacturing companies in the world.’
- Nestle (Switzerland)
- Lactalis (France)
- Danone (France)
- Fonterra (New Zealand)
- FrieslandCampina (The Netherlands)
- Dairy Farmers of America (USA)
- Arla Foods (Denmark and Sweden)
- Yili Group (China)
- Saputo Inc. (Canada)
- Mengniu Dairy (China)
- Dean Foods (USA)
- Unilever (The Netherlands)
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What are the drivers of the price of cheddar cheese?
As with other agricultural commodities, the price of dairy commodities such as cheese is the result of the interaction of supply and demand as well as the impact of speculation on the commodity market.
Contrary to other agricultural commodities, the weather has a lesser impact on the supply of dairy products as the animals will produce milk in any weather conditions. Although, severe droughts may force farmers to reduce the numbers of their cattle due to a lack of grazing.
Actions of governments, such as export or import limits and subsidies, can influence dairy prices significantly.
Furthermore, the costs of feed affect the price of dairy products directly. Feeding costs contribute a significant amount to the total production costs of dairy products. Being two of the largest producers of grain in the world, the Russian war in Ukraine, and subsequent sanctions imposed on Russia, have already caused an increase in the final price of dairy commodities.
Regarding cheese as a commodity, seasonal demand can boost the demand for the commodity. For instance, the grilling season (the weeks between Memorial Day and Labour Day) in the USA when barbecues are at the order of the day – and every burger has to include a large portion of cheddar cheese.
The uses of cheddar cheese
Cheddar cheese is remarkably versatile and can be used in numerous ways.
The following uses are only an indication of cheddar’s versatility and usefulness:
- Sliced cheddar is a great addition to sandwiches and burgers.
- Grated cheddar is used in dishes like macaroni and cheese, potatoes, soups, salads, pasta dishes, pizzas, cakes, and pies, to name a few.
- A cheese fondue.
- Cheddar can be eaten on its own or with bread, fruit, and drinks such as beer and wine.
- Cheese straws are an excellent appetizer.
Cheddar is used on a large scale in the fast-food industry in, inter alia, burgers, and pizzas.
Note: This article does not constitute investment, financial, or trading advice. Please obtain the advice of a professional and regulated commodity broker before making trading and investment decisions.
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