Dairy markets in flux: prices are falling, demand is shifting – what’s next? [257th Edition of DAIRY Newsletter]

Welcome Partners!

Welcome back to our newsletter!

In this issue, we present the latest market information on cheese, butter, milk and whey powder, analysing price trends and changes in supply on the European market. As seasonal milk production increases, we assess its impact on key dairy commodities. We also look at Indonesia’s bold move to invest $500 million in expanding milk production, the US egg price crisis caused by avian influenza, and the rapidly growing global dairy blend market, which is forecast to reach $89.4 billion by 2035. Stay up to date with analysis on market developments, new trends and factors shaping the global dairy industry.

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

Milk powder

The European market for skimmed milk powder (SMP) remains stable, with food-grade SMP prices remaining in the 2500-2550 EUR/MT range. The seasonal increase in milk production has caused a slight downward adjustment. Fresh SMP now costs 2550 EUR/MT, while older stocks are available at slightly lower prices. Market sentiment remains positive, supported by limited supply.

Bulk feed SMP continues to trade at 2450 EUR/MT, with confirmed contracts for Q1 and Q2 at 2500 EUR/MT DAP NL or higher. The market is keeping a close eye on whether rising milk consumption will lead to price changes in the coming months. As mentioned in our previous newsletter, Algeria’s state milk buyer, O.N.I.L, has launched a new tender for SMP and WMP, with deliveries scheduled from May to August. The results of this tender could influence price formation and market sentiment. We await the O.N.I.L’s decision – an update should appear this week.

Cheese

The European cheese market is showing signs of weakening, mainly due to an increase in production and slightly higher stock availability.

Gouda has seen slight price falls, with producers accepting slightly lower rates for March and April volumes. However, buyer and seller activity has increased, indicating stable market engagement.

Cheddar prices also fell, reaching 4750 EUR/MT, reflecting a change in market sentiment due to rising milk production in Ireland. With production accelerating in March, a greater supply of cheddar will hit the European and global markets. Although supply is likely to increase until the end of the second quarter, stable global demand and good consumption levels should support prices in both Europe and the US. In the US market, additional export-related factors will play a key role in shaping price dynamics.

Mozzarella remains the main driver of weakening sentiment in the European cheese market. With the decline in butter prices, some producers have redirected production towards mozzarella, increasing supply at a time of seasonally lower consumption.

Cagliata, on the other hand, is the least popular with buyers, resulting in small price falls. Lower demand has contributed to a more competitive market environment, prompting sellers to adjust their offers.

Fats

European butter prices have fallen slightly, currently at 7200 EUR/MT, down from 7350 EUR/MT. Bids for Q2 contracts are in the range of 6750-6900 EUR/MT, reflecting an adjustment due to an increase in seasonal milk production. Deliveries for February-March are in the range of 7050-7200 EUR/MT, in line with product prices from Germany, the Netherlands and Belgium. Poland saw an offer of less than 6900 EUR/MT for immediate deliveries.

The market for anhydrous milk fat in Poland and Western Europe has seen prices fall. Supply remains stable, ensuring availability for buyers. Market participants are closely monitoring whether the downward trend continues, especially in the context of wider weakness in the milkfat sector. Although demand has not shown significant fluctuations, overall market sentiment remains cautious as buyers analyse potential price movements in the coming weeks.

Liquid dairy products

The cream market is showing signs of an upward correction, with German cream currently trading in the 8100-8200 EUR/MT FCA Germany range. Seasonal milk production is increasing, although the impact on cream availability remains gradual. In Poland, cream prices fell last week, reflecting local market adjustments.

Concentrated skimmed milk (SMC) prices have increased – German products are now priced at 2100-2200 EUR/MT FCA DE. Seasonal trends in milk production may further influence prices in the coming weeks.

Whey powder

The European whey powder market remains relatively stable. Food grade SWP prices are at 1050-1100 EUR/MT, while feed grade SWP is in the range of 910-950 EUR/MT. DAP NL bulk feed whey is quoted at 925-950 EUR/MT for Q1 and Q2 contracts. Sweet whey concentrate prices have increased and are now at 750-800 EUR/MT FCA.

Cheese production is expected to increase in the second quarter, which could lead to a drop in whey concentrate prices. Meanwhile, WPC80 instant remains at 11,000 EUR/MT, supported by stable demand and limited supply. The whey protein isolate (WPI) market is particularly tight, with prices reaching 21,000 EUR/MT due to supply shortages and strong demand.

News

Asia

Indonesia is launching an ambitious plan to increase milk production to reduce imports and strengthen local agriculture. The government’s Free Nutritional Meal (FNM) programme, starting in 2025, will provide daily servings of milk for millions of children and pregnant women. To meet the growing demand, the country plans to import as many as one million dairy cows by 2029, which is expected to increase domestic production by 25%.

The government has already allocated more than $500 million to develop the dairy sector, making 92,000 hectares of land available for cattle farming. The first 200,000 crowns are expected to be brought in in 2025, with a gradual increase in the following years. More than 140 companies are involved in the project, including Vietnam’s TH Group, which plans to build modern dairy farms and processing plants. With this, Indonesia aims to become a regional leader in milk production and reduce its dependence on imports, which currently cover as much as 80% of domestic demand.

North America

Egg prices in the US have risen sharply due to the avian flu epidemic. In January 2025, the average price of a dozen grade A eggs reached $4.95, 53% higher than a year earlier, and in some states, such as California, it is as high as $10. In response, major retail chains, including Trader Joe’s and Costco, have imposed purchase restrictions and customers are struggling to afford them.

Since 2022, avian flu has culled more than 163 million birds, significantly reducing the supply of eggs. As a result, imports from Mexico are on the rise and the catering industry is facing price increases. The increase in the value of eggs has even led to thefts – 100,000 eggs worth $40,000 were stolen in Pennsylvania. Experts predict that the situation may not improve until the second half of 2025.

Global

The global market for dairy blends is expected to reach $8.94 billion by 2035. The projected growth is driven by increasing demand for products with reduced fat and calories, as well as the search for cheaper alternatives to traditional dairy products.

Dairy blends, which are combinations of dairy and non-dairy ingredients, are gaining popularity due to their versatility and nutritional value. They are used in various sectors of the food industry, from beverage production to bakery products. The decisive factors driving the growth of this market are product innovation and changing consumer preferences, who are increasingly turning to healthier and more varied dietary options.