Christmas frenzy in the dairy market – seasonal changes and challenges [247th Edition of the DAIRY Newsletter]

Welcome Partners!

Welcome back to our newsletter!

As 2024 draws to a close, the global dairy market is grappling with both stability and change – what challenges and opportunities will 2025 bring? Skimmed milk powder (SMP) prices remain stable, but forecasts suggest possible changes on the horizon. The cheese market is sending mixed signals – some types are stabilising, while others are facing a decline in demand. How will butter and cream prices evolve in light of seasonal trends? What is driving the dynamics in the whey and fat market? Get ready for the changes to come.

Let’s see what has happened in the dairy market recently!

Milk powder

Skimmed Milk Powder (SMP) currently remains at a stable price level, with moderate demand. Prices for the product for food use are in the range of 2600-2700 EUR/MT, with forecasts for further increases in the first half of 2025, with offers reaching up to 2800 EUR/MT.

The market for SMP for feed also remains stable, hovering around 2550 EUR/MT. In recent months, we have seen an increase in the cost of concentrates, indicating a stabilisation of the sector and possible price increases in the coming quarters, especially if demand from the food industry increases.

Cheese

Cheese prices are showing some volatility, with Gouda and Edam costing 4450-4550 EUR/MT, while Mozzarella has fallen slightly, attracting some buyers, although overall interest in this cheese remains subdued. Similarly, Cagliata is experiencing lower demand, which is contributing to the drop in its price. In contrast, the market for Emmental cheese remains tight, with limited availability and high prices. Towards the end of the year, higher stocks and weaker demand are causing price falls, which may continue or fall slightly in January, depending on milk availability and market interest. An increase in Emmental cheese production at the beginning of the year may help stabilise prices.

Fats

Butter prices are currently on a downward trajectory, mainly due to declining demand towards the end of the year. Butter in 25kg blocks is currently priced between 7000 and 7400 EUR/MT and the outlook for next year suggests further reductions, particularly for second quarter deliveries where prices could fall below 6800 EUR/MT. Nevertheless, demand in the retail sector remains strong, with smaller customers continuing to seek fresh produce at prices above 8500 EUR/MT, providing some stability in this segment.
It is worth noting the increased interest in in-house processing in Europe, which is helping to offload surplus butter onto the market.

The Anhydrous Milk Fat (AMF) market has experienced stabilisation, with prices currently between 9700-100 EUR/MT. Export performance remains solid, driven by demand from the confectionery sector in preparation for seasonal production.

Liquids

Cream prices in Europe have started to decline, currently ranging between 10 200 and 10 500 EUR/MT FCA. A further decline to below 9000 EUR/MT FCA is expected over the festive period, and prices could fall below 8700 EUR/MT FCA in January. Weaker demand over the Christmas period may sustain this downward trend.

Skimmed Milk Concentrate (SMC) is currently priced in the 2400-2500 EUR/MT range. Demand has been boosted by increased export volumes as many producers are turning to condensed milk to reduce costs. Seasonal fluctuations may affect prices, but stable milk collection and processing are expected to maintain price levels in the short term.

The Milk market in Europe shows seasonal fluctuations, with a slight decrease in spot prices, which are currently around 600 EUR/MT. Supply prices in southern Germany range between 660-670 EUR/MT and in France they reach 550 EUR/MT. As milk production begins to increase at the start of winter, forecasts suggest that supply will increase, which could influence further price reductions in the short term.

Whey powder

SWC prices have been on the rise recently, now reaching 1000-1100 EUR/MT (FCA Germany). This increase is due to reduced cheese production, reduced whey availability and increasing demand for high-protein whey concentrates. Similarly, Whey Protein Isolate (WPI) prices continue to rise, currently at 19 000 EUR/MT, reflecting strong market demand. Meanwhile, demand for WPC 80 remained stable in January, suggesting a balanced outlook for high-protein products in the near term.

In Europe, prices for Sweet Whey Powder (SWP) food grade remain stable, oscillating between 870-900 EUR/MT (FCA Germany). The feed version remains at 920-930EUR/MT for both Q4 this year and Q1 next year. The stability of prices is due to the balance between supply and demand, despite the decline in SWP production in Europe and the US. Nevertheless, the growing interest in whey protein concentrates and isolates may influence the future development of SWP prices.

What else?

New Zealand

New Zealand dairy company Fonterra has launched a new UHT cream created specifically for bakeries in the Chinese market. The product, called Anchor Easy Bakery Cream, was unveiled at the Shanghai International Trade Fair. The cream, made from 100% New Zealand milk, is designed to meet the growing needs of the Chinese market, where more and more people are looking for high quality dairy products.

North America

In a letter to the editor, farmers in the US state of Wisconsin warn that Donald Trump’s immigration plans could hurt their dairy farms. The new rules, which are expected to tighten immigration controls, could make it harder to access the workers on which milk and dairy production heavily relies. Farmers fear the labour shortage will raise production costs and threaten their business. The dairy industry is one of the most important pillars of Wisconsin’s economy, so farmers are calling for a more measured approach to immigration reform.

Asia

According to a recent Rabobank report, after three years of decline, Chinese dairy imports are expected to increase by 2% in 2025. Previously low milk procurement prices in China have led to herd reductions and farm closures, reducing domestic production. Although consumer demand remains weak, there is hope for a recovery, which, combined with lower domestic supply, could increase demand for imported dairy products.