![Dairy market review: supply shrinks, prices of key products rise [235th edition of Foodcom DAIRY newsletter]](https://foodcom.pl/wp-content/uploads/2023/08/Foodcom_Newsletter_Dairy-1520x760.jpg "Dairy market review: supply shrinks, prices of key products rise [235th edition of Foodcom DAIRY newsletter]")
- Skimmed milk powder and cheeses such as Gouda and Mozzarella are seeing price increases due to limited supply and high demand.
- In Europe, cattle health problems, such as bluetongue, are leading to reduced milk production and logistical challenges are forcing producers to seek alternatives, such as shipping, to ensure supply chain stability.
- In New Zealand and Australia, key dairy plant closures and company debt are having a devastating impact on local farmers, particularly on King Island, where drought and rising costs are leading to serious problems in the dairy industry.
Welcome to Partners!
Welcome back to our newsletter!
Prices for dairy products such as skimmed milk powder, cheese and butter continue to rise, with limited supply and high demand keeping the market tight. The European market is experiencing milk production problems due to, among other things, cattle diseases, which is further affecting prices. In New Zealand and Australia, on the other hand, the industry is struggling with dairy plant closures, which is having a negative impact on local farmers and the overall economy.
Let’s see what else has happened in the dairy market recently!
Skimmed milk powder
On the feed market, SMP prices have risen to EUR 2600/MT in the fourth quarter of 2024, with offers for the first quarter of 2025 reaching EUR 2750/MT. However, with these higher prices, there are no willing buyers yet. SMP for food use has already surpassed EUR 2500/MT, driven by rising raw material costs and increased food demand. SMP exporting producers need to plan their purchases for the beginning of the year.
Cheese
Cheese prices such as Gouda and Mozzarella are hovering around €4,500-4,600/MT, while Cheddar is quoted at €4,850-4,950/MT. It is worth noting that supplies of Gouda are getting younger due to lower production volumes – the cheeses now only have around four weeks to pick up. Reduced supply combined with still good demand is contributing to price stability.
Fats
On the German market, retail butter prices in September are EUR 7,900-8,100/MT. Wholesale butter prices in October, on the other hand, range between EUR 7 850 and EUR 8 050/MT. Interestingly, prices for the first quarter of 2025 have increased from the previous EUR 6 950/MT to around EUR 7 300/MT. The price increase can be attributed to limited supply and stable demand, which remains high. Many suppliers declare that they are sold out.
Liquids
Cream prices remain high, with transactions settling around EUR 9 850-9 950/MT FCA. The price of delivered cream is already above €10,000/MT. Demand for cream remains high, suggesting a stable market situation in the coming months.
Skimmed milk concentrate prices fell slightly in September 2024, settling in the range of €2,450-2,550/MT FCA. This decline can be attributed to technical problems at one factory in France, which temporarily reduced demand for the product. Despite the temporary decline, prices remain relatively high due to limited supply on the market and significant demand for other dairy products.
Spot milk prices have reached levels above €0.60/kg. Many farms are experiencing problems related to bluetongue, which affects the dairy cow population. Farmers in Europe, especially in Germany, are being forced to send sick cows to the slaughterhouse, reducing milk production. It is expected that problems with new infections will reduce over the winter period, but returning sick cows to full production capacity will be a challenge.
Whey powder
European feed SWP prices currently stand at €800-900/MT, while food SWP prices range between €930-1050/MT, reflecting a robust market. Growing demand for high-protein products such as WPC80 (whey protein concentrate) and WPI (whey protein isolate) continues to support strong market activity. The increase in whey concentrate prices, especially in Germany, is due to reduced supply, partly due to delays in opening new production plants. These factories, which became operational at the end of the third quarter, increased demand for liquid whey, further tightening the market.
What else?
We opened two new offices!
Following the success of our expansion to date, we are continuing to develop our operational structure. The new offices in Krakow and Wroclaw are another step in the company’s long-term strategy to expand our business in European markets, as well as to improve cooperation with partners in the region.
New Zealand
The Waitonui Group, which managed farms of 3,500 hectares and supplied milk to Fonterra, was liquidated at the request of the Internal Revenue Service. The group had failed to pay a $36.5 million debt to BNZ, despite earlier mediation. The Supreme Court declared the company insolvent. Milltrust International withdrew from managing operations in New Zealand in 2021.
Australia
TasFarmers has expressed serious concern about the planned closure of the King Island dairy plant, which will have a devastating impact on local farmers. President Ian Sauer highlighted that the decision comes at the worst possible time as the island struggles with drought, transport problems and rising costs. He is calling on the plant owner, Saputo, to act responsibly and support farmers in this difficult situation.
