Dairy is getting more expensive, the market is changing – what’s driving prices and what are the forecasts? [259 Edition of DAIRY Newsletter]

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Welcome back to our newsletter!

Let’s take a look at what has been happening in the dairy market recently!

Milk powder

SMP prices for food use have fallen to €2450-2475/MT due to increasing supply and reduced demand in some Asian markets. The recent outbreak of foot-and-mouth disease in Hungary, the first in 50 years, raises concerns about its impact on milk production and export routes. Veterinary authorities have imposed transport and trade restrictions, which could cause shifts in European supply chains. Regulatory uncertainty caused by the outbreak has prompted some importers to seek alternative sources of supply, particularly in Western Europe and non-EU countries, potentially affecting the balance of supply and demand in the coming months.

Meanwhile, SMP prices remained unchanged after the last GDT auction, while WMP recorded a 2.2% decrease. At the same time, the overall trend for milk fat prices is upwards, with WMP in the EU reaching €4,600/MT with limited European supply availability. The limited supply of WMP in the region further contributes to market tightening and price pressure. Feed SMP remains stable, reflecting balanced market conditions in the feed sector.

Lactose saw the most growth and interest at the last GDT auction, with a sharp increase of 14%, reflecting strong market demand and tightening supply conditions.

Cheese

Gouda prices rose to almost €4500/MT, while edam reached €4400/MT. The end of February and the beginning of March saw increased demand for these cheeses, particularly in Western Europe, where retail chains secured supplies ahead of the Easter period. Today we saw transactions for Gouda at €4450/MT for Q2 deliveries, reflecting ongoing market activity and stable demand.

Emmental cheese prices remain stable at EUR 5200/MT. In contrast to the more dynamic cheese segments, the Emmental cheese market is characterised by more stable price movements due to the longer ripening process. However, limited milk supply in key production regions could push prices higher in the coming weeks.

Prices for mozzarella rose to more than €4200/MT in Europe, a significant increase compared to the previous month. The segment is benefiting from growing demand for pizza and ready-to-eat cheeses, particularly in Asian and Middle Eastern markets. The European mozzarella market has experienced a surge in prices in recent weeks, driven by rising milk fat prices and a change in market sentiment as more buyers actively seek supply.

Cheddar cheese prices have risen to around €4900/MT, with stable demand. There remains a strong correlation between butter and cheddar prices in Europe, meaning that future trends in the dairy fat sector could directly influence cheddar price movements.

Fats

Butter prices in Europe have risen to EUR 7500-7700/MT, driven by strong demand from the bakery sector and rising raw milk prices. In addition, the limited availability of cream is contributing to price pressure in the dairy fat market. The outbreak of foot-and-mouth disease in Hungary has also raised concerns about potential disruption in neighbouring countries, which could further affect cream supply and increase market volatility in the coming weeks.

Prices for anhydrous milkfat (AMF) have exceeded EUR 9,000/MT and the market continues its upward trend. Global demand for milkfat is increasing, especially in Asia and Latin America, which could lead to further price increases.

Fluids

Cream prices in Germany currently fluctuate between EUR 8400-8500/MT, while in Poland they have reached EUR 8900/MT. Supply in Europe remains limited and high butter prices are further driving demand for this commodity. The full impact of the FMD outbreak on the dairy market is still uncertain, but potential restrictions on milk production could push cream prices higher in the coming weeks. In addition, rising transport costs for dairy raw materials due to veterinary restrictions could affect processors’ margins.

The European dairy market is in a phase of uncertainty due to the spread of FMD in Hungary. Farmers and producers are concerned about possible restrictions on the movement of animals and dairy raw materials, which could lead to local raw milk shortages and price increases. In Western Europe, raw milk prices have risen by 3-5% in recent weeks, reaching €490-520/MT, with some countries such as Germany and France exceeding €530/MT. Further developments will depend on the extent of the spread and the reaction of international markets. Seasonal increases in milk production in the spring may mitigate the effects of potential restrictions, but the situation remains dynamic. Exporters are concerned that long-term sanitary and veterinary restrictions could disrupt the stability of raw material supplies, affecting processor margins and future price forecasts.

Concentrated skimmed milk (SMC) prices in Germany are in the range of €2100-2200/MT, and strong demand from the dairy industry suggests further price stability at high levels.

Whey powder

Prices for SWP for food use remain at EUR 1100/MT, while SWP for feed use is EUR 950/MT. Consistently high demand for dairy proteins is stabilising the market, and further growth in the sports nutrition segment may support strong price positioning.

WPI prices exceeded EUR 22,250/MT, reflecting tight supply conditions and a global shortage of the product. Growing interest in WPI in the pharmaceutical and supplement industry is limiting availability. Meanwhile, WPC 80 continues to enjoy the highest demand from Asian markets, with prices well above EUR 11,000/MT. Market availability remains limited, putting additional pressure on price dynamics.

News

Europe

After several months of restrictions, China has agreed to resume imports of German heat-treated dairy products. The restrictions were introduced at the beginning of the year after a case of foot and mouth disease was detected in Brandenburg. Now the decision to reopen the market is good news for the German dairy sector, which regards China as one of its key trading partners.

Germany’s Minister of Agriculture, Cem Oezdemir, stressed the importance of the decision, pointing out that China is one of the most important markets for German dairy products. The return to the Chinese market is expected to greatly benefit German exporters and stabilise the industry after previous difficulties.

Europe

The Netherlands, as one of the leading exporters of eggs, has started a pilot programme to vaccinate laying hens against avian influenza. The disease has caused massive poultry culls and rising egg prices in recent years, and has raised concerns about the potential risk to humans.

The programme, based on tests of the efficacy of two vaccines, will initially cover one farm and last until 2027. The Netherlands wants to test the market reaction to eggs from vaccinated hens and gradually implement vaccination on a wider scale. The Minister of Agriculture stressed that this is an important step to fight the epidemic and protect the poultry sector.

Europe

Belarus significantly increased its dairy exports in 2024, reaching more than 6 million tonnes, an increase of 11.5% compared to the previous year. The value of exports increased even more – by 17.5% – reaching US$3.4 billion, well above previous forecasts. The government plans to develop the sector further, targeting an increase in production to 10.5 million tonnes by 2030, which is expected to translate into exports worth $4 billion.

An important factor in the success has been the diversification of export markets. Belarusian dairy products went to 69 countries, including Algeria, Mexico, Kenya, Kuwait and Nigeria for the first time. At the same time, Belarus strengthened its dominance on the Russian market, supplying as much as 953,000 tonnes there out of the one million tonnes of dairy imported by Russia in 2024. Dairy exports accounted for 40.3% of Belarus’ total food exports, highlighting the strategic importance of the industry to the country’s economy.

North America

Boston-based startup Brown Foods is launching UnReal Milk – the world’s first whole cow’s milk produced in a lab, without live cows. Using mammalian cell culture technology, UnReal Milk replicates the nutrients, taste and texture of traditional milk, making it possible to produce butter, cheese or ice cream. The process reduces carbon emissions by 82%, water consumption by 90% and the area needed for cultivation by 95%, eliminating the need to raise animals.

Independent testing by the Whitehead Institute for Biomedical Research, affiliated with MIT, confirmed the presence of all essential milk proteins in UnReal Milk, making it structurally identical to traditional milk. Brown Foods plans to conduct taste tests in 2025 and a market pilot in 2026, which could revolutionise the dairy industry by offering a sustainable alternative to traditional milk production.