Butter rally and tight supply shift DAIRY sentiment [298th Edition Foodcom DAIRY Newsletter]

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At the beginning of February, the dairy markets strengthened noticeably in most segments. Strong price increases for butter, milk powders and proteins are changing market sentiment, while liquidity has declined significantly. Milk buying remains high, but stock visibility has deteriorated and sellers are increasingly unwilling to offer volumes. Butter has become the clear market leader, pulling up the prices of cheese and cream. Dairy powders are rapidly increasing in price amid strong export demand and limited short term availability. Overall, volatility has increased significantly and the market has become very nervous.

Milk powders

Skim milk powder markets have moved sharply higher. Food-grade SMP is now discussed between 2450 and 2550 EUR/MT FCA, with some market indications reaching up to 2650 EUR/MT DAP. Availability nearby is tight, and buyers are questioning where visible stocks have gone, despite warehouses reportedly remaining well filled. Selling interest has dropped materially. 

Feed-grade SMP has followed food prices and is now trading at a premium. Q2 business has been reported around 2700 EUR/MT DAP, with limited sellers remaining in the market. High milk intake continues, but drying capacity remains constrained as demand for alternative protein streams remains strong. 

Skimmed milk concentrate prices have increased further and are now discussed between 1700 and 1800 EUR/MT FCA Germany, with France trading slightly lower around 1650 EUR/MT. The continued strength in concentrates is providing a solid floor for SMP prices. At the same time, MPC 85 values are also edging higher, reflecting strong protein demand and limited availability. 

In short, milk powder markets are firming rapidly, with tight nearby availability and rising nervousness despite structurally high milk supply. 

Cheese

Cheese markets are firming further. Following the strong butter rally, producers have largely withdrawn foil-ripened cheese offers below 3200 EUR/MT. Demand is reported as strong for prompt, March, and Q2 deliveries. Cagliata and Cheddar markets are also moving higher, in line with the broader firming seen across the cheese complex. 

Producers appear comfortable with current sales positions, and there is little appetite to push volume into the market. With butter values supporting milk valorisation, cheese prices are not expected to come under pressure in the coming weeks. 

Cheese remains resilient and increasingly supported by strength across the wider dairy complex. 

Fats

Butter is clearly the strongest product in the market. Sentiment shifted dramatically within days, from denial to outright panic. Q2 butter prices surged from around 4100 EUR/MT to peaks near 4800 EUR/MT before correcting back toward 4300 EUR/MT. 

The sharp swings underline how nervous and illiquid the market has become. While the recent pullback could be described as a technical correction, it does not change the underlying tightness and strong demand. 

Butter has become the main price driver across dairy markets and continues to dominate sentiment. 

AMF prices are also trending firmly higher, supported by global demand and limited substitution possibilities. 

Liquids

Cream prices have increased further and are now discussed between 3800 and 3900 EUR/MT FCA, supported by strong demand and reduced selling interest. Sellers appear increasingly confident and unwilling to accept lower levels. 

At these cream prices, butter production remains attractive, reinforcing strong butter output and continued volatility in the fats market. 

SMC remains firm at elevated levels, supported by strong milk flows and limited processing flexibility. 

Spot milk prices, however, have not reacted to the rallies seen in butter, powders, and cheese. Spot milk remains stable at very low levels around 20 EUR/100kg. Payout expectations continue to weaken, and further farmer exits are expected in 2026. 

Overall, liquids are well supplied, but pricing dynamics are increasingly driven by downstream product markets.

Whey powder

Sweet whey powder markets are firming. Feed-grade SWP is discussed around 1030–1050 EUR/MT nearby and up to 1100–1130 EUR/MT for Q2. Food-grade material is holding around 1100–1150 EUR/MT.

Whey concentrate prices remain unchanged at 700–800 EUR/MT, but at these elevated levels they continue to set a firm floor for SWP and lactose.

The protein complex remains the strongest part of the dairy market. WPC80 prices continue to rise and are now discussed around 14 700–15 000 EUR/MT, with availability extremely limited. Much of Q1 and Q2 production is already sold, constrained by limited ultrafiltration capacity.

WPI prices remain exceptionally high above 23 000 EUR/MT, with minimal spot availability. Lactose prices are also firming, supported by steady demand and additional re-processing activity.

Proteins continue to outperform the rest of the dairy complex and provide strong indirect support to the broader whey market.

What’s new?

Europe

Serotype 3 bluetongue virus is still present in the UK for the 2025 and 2026 seasons, with two new cases confirmed on 30 January 2026 in England, in the counties of Devon and Cumbria. According to the Department for Environment, Food and Rural Affairs, there have been 284 cases of the disease in the UK since July 2025, mainly associated with serotype 3, with England being the most affected. Lower temperatures have reduced the risk of transmission by the flies, but authorities warn that infection is still possible through already infected vectors or biological material. The Agriculture and Horticulture Development Council is encouraging farmers to consult their vets about vaccination. Three serotype 3 vaccines have been licensed for use in the UK.

Asia

Foot and mouth disease has re-emerged in South Korea after a nine-month hiatus. An outbreak was confirmed on 30 January 2026 at a cattle farm in Inchon, near the border with North Korea. According to the World Organisation for Animal Health, 87 out of 246 cattle were infected, and all animals on the farm were disposed of. Authorities imposed a 48-hour ban on animal movements in Inchon and neighbouring Gyeonggi province and carried out extensive testing and bio-assurance measures . The previous FMD outbreak in South Korea occurred in April 2025 and involved more than 16,000 cattle and pigs.