Dairy market dynamics: prices, demand and market information [251th Edition of the DAIRY Newsletter]

Welcome Partners!

Welcome back to our newsletter!

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

Milk powder

The market for skimmed milk powder (SMP) remains stable, with prices for the fresh product hovering around 2550 EUR/MT. Older stocks were trading below 2450 EUR/MT, although these transactions took place outside the main market. Demand has recovered from the festive period and activity has increased in both domestic and export markets. SMP for feed remains stable at 2450 EUR/MT DAP NL for Q1 delivery, indicating signs of market stabilisation.

Cheese

The European cheese market starts the year with a significant increase in prices. Gouda prices rose to 4300 EUR/MT thanks to improved market activity last week. Stock levels remain under control, allowing producers to maintain higher prices. Mozzarella saw a significant improvement, reaching 4050 EUR/MT, driven by renewed demand and positive market sentiment. Emmental prices fell slightly to 5150 EUR/MT, but demand continues to outstrip supply, maintaining a premium over Gouda. Cagliata is seeing an increase in demand, although prices remain stable. Meanwhile, cheddar prices are rising, reflecting a general upward trend in the market. The long-term outlook suggests a stabilisation of prices as production increases to meet demand.

Fats

Butter prices have rebounded, approaching 7400 EUR/MT for fresh supplies, although some individual transactions, such as frozen batches from Poland, were at 7000 EUR/MT. Rising cream prices have influenced this increase, highlighting the upward trend in the dairy fats market.

The anhydrous milk fat (AMF) market remains stable, with prices in the 9200-9400 EUR/MT range, supported by strong export demand, particularly from the confectionery sector.

Liquids

Cream prices increased significantly this week, reaching a range of 8400-8800 EUR/MT. The market has seen a steady upward trend, driven by strong demand from both domestic and export customers. The additional availability of cream resulting from increased milk production has provided some relief to buyers, although not enough to fully stem the price rise. Producers are closely monitoring the balance between supply and demand, expecting further stability in the near term.

Concentrated skimmed milk (SMC) prices have increased significantly, currently reaching 2100-2250 EUR/MT FCA DE. This increase reflects strong demand from processors and exporters as the market adjusts to post-Christmas production levels. The SMC market is expected to remain stable in the short term, supported by steady demand and cautious production increases by suppliers.

Spot milk prices also increased this week, reflecting strong demand and seasonal adjustments in production. The current spot market is at around 560-600 EUR/MT, driven by increased milk intake during the seasonal peak. This upward trend is expected to continue in the short term, balancing the production cycle and demand dynamics.

Whey powder

Sweet whey concentrate (SWC) continues to hold its own at 1000-1100 EUR/MT FCA DE. Its high protein content and versatility in food production maintain its popularity and strong demand.

The total whey market remains tight due to limited cheese production, which directly affects whey availability. Strong export demand, especially for higher-value products such as whey protein concentrates (WPC) and isolates (WPI), keeps prices high. These premium whey products are benefiting from steady growth in the health and nutrition sectors, which ensures price stability.

Looking ahead, potential growth in cheese production could ease supply constraints and dampen price movements. However, current forecasts indicate continued price stability for whey products, particularly for SWC, as demand remains strong in both domestic and international markets.

What else?

Europe

The dairy cooperative Sierpc (OSM), located in the Mazowieckie Voivodeship in Poland, is making a significant investment in a new cheese production facility adjacent to its current plant. The project aims to replace outdated infrastructure and increase production capacity. The new plant will be capable of processing 600,000 litres of milk per day, ensuring the efficient use of raw materials that were previously sold externally.

Grzegorz Gańko, CEO of the company, highlighted the ongoing efforts to develop new types of cheese using innovative cultures. These additions are aimed at diversifying the product range and meeting changing consumer preferences. In addition, the cooperative focuses on sustainable production with an emphasis on energy and water efficiency, in line with legal and environmental standards.

North America

The US dairy industry faces significant challenges in the face of President-elect Donald Trump’s plans for mass deportations of undocumented immigrants, who are integral to dairy farm labour. Farmers are expressing concern that such measures could jeopardise their ability to maintain production levels. Rick Naerebout, CEO of the Idaho Dairymen’s Association, warns that the country’s food security could be jeopardised if the deportations go ahead.

A Texas A&M study found that a 50% reduction in the dairy workforce could result in $16 billion in economic losses. The National Milk Producers Federation is calling for reforms to ensure legal status for current workers and the implementation of a seasonal worker programme to ensure industry stability.

President-elect Donald Trump recently stated that the US does not need Canadian dairy products, suggesting a preference for domestic production.

In 2023, Canada exported approximately CAD488 million worth of dairy products to the US. Industry experts warn that eliminating dairy imports from Canada could disrupt supply chains and potentially lead to higher prices for consumers. The US dairy sector is closely integrated with Canada’s, and sudden policy changes could have unintended economic consequences.

As the new administration considers trade policy, stakeholders from both countries stress the importance of maintaining balanced and mutually beneficial dairy trade.