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Don’t lock a fixed cheese contract on this spike: get a quote now, get a second one in two weeks, and sign only if it holds. In late September, block cheddar on the Chicago Mercantile Exchange fell to $1.27 a pound, a price one dairy broadcaster called “not seen in nearly a decade.” Then, in the week of October 12, blocks closed every day higher and finished Friday at $1.6825, up 29.75 cents from the Friday before. That’s about 21% in one week. If your cheese invoice follows the block, and it probably does, the cheapest cheese in years just got a lot less cheap on paper.
Your mozzarella price is a block price with a markup
The largest chains price cheese this way. Domino’s says the price it charges U.S. franchisees for cheese is formula-based, with the CME cheddar block price as the primary component. It puts cheese at about 25% of the food basket at its company-owned stores. Papa John’s calls cheese its largest food cost.
For independents, the long-standing arrangement is “block plus.” PMQ described it years ago: the distributor quotes a weekly price from the CME block average plus an agreed cents-over-block up-charge that covers freight, warehousing, delivery and margin. That piece is from 2004, so treat its dollar figures as history. The mechanism is the part that hasn’t changed.
The arithmetic is simple. Every 10 cents on the block is 10 cents on every pound you buy. At a hypothetical 200 pounds a week, last week’s 29.75-cent move is about $60 a week, or roughly $3,100 a year if it stuck. That’s our math. Swap in your own pounds.
The jump looks like a squeeze, not a turn
The analysts quoted in this month’s coverage don’t read the rally as a change in direction. T.C. Jacoby’s weekly report, as summarized by DairyBusiness, put it down mainly to a temporary shortage of exchange-eligible product, possibly from manufacturing problems that left young cheddar short. The same report expects that tightness to ease and says cheese could fall again. Demand isn’t helping. Domestic cheese consumption was down 0.5% year over year in August, with American varieties down 1.2%.
USDA’s market reporters describe a market that’s still heavy. In the West, “Cheese is long and the tone is flat,” with plants running at full capacity. In its October forecast, USDA lowered its cheese price forecasts for both 2026 and 2027.
There’s another reason prices moved, and it should worry you. A risk analyst told the Mid-West Farm Report that buyers saw the low prices as a chance to hedge their coming-year needs at steep discounts, and that commercial buyers set their budgets in the fall. The buyers who hedge were locking in near the lows. You’re getting quotes after they did.
The block is the price everyone can see. Your invoice is the block plus whatever you stopped asking about.
The one line that cuts against waiting
For a pizzeria, one detail matters more than the headline. In the Central region, USDA reporters note that mozzarella and parmesan orders and sales are strong while inventories are light. Cheddar is plentiful. Your cheese may not be. If your distributor’s mozzarella supply is tight, the up-charge over block is where you’ll feel it, even if the block itself drifts back down.
That’s why the spread matters as much as the block. Pizza Today’s advice from last fall still holds: consider a single-vendor contract, ask about a cost-plus arrangement, and lock in prices when the market gives you the chance. PMQ’s older piece notes that reps can work with their dairy buyers to fix the invoice cost for one to three or six months. Neither works if you don’t know what you’re paying over block today.
Before you sign anything, price a bad year. Blocks peaked at $1.8845 in February 2025. Work out what each pie costs you in cheese at today’s block and at that peak. The difference is what a fixed price is protecting you from. If that number is small at your volume, a one-week spike isn’t worth a six-month commitment. If it would force a menu price change, a lock is insurance, and insurance is worth buying before the next spike. As we laid out in the real cost of running a pizza shop, portioning comes first. A loose hand on the cheese costs you at any block price.
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The honest limitation: nobody publishes what independent pizzerias pay over block, and nobody publishes how mozzarella moves against the cheddar benchmark, so your spread is the one number here you have to get yourself. The analysts could also be wrong. Mozzarella inventories are already light, and if the squeeze spreads, the second quote will be worse than the first. The next USDA Milk Production report, due October 22, is the next number to watch.
