European dairy market: cheddar prices rise, WPC80 weakens, and butter prices fall [Issue 318 of the Foodcom DAIRY Newsletter]

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As of mid-September, the situation on the European dairy market is becoming increasingly varied. Milk proteins continue to hold a strong position, while butter and cream are under greater pressure. Compared to the beginning of the month, concerns about a sharp decline in milk supply in Europe have also eased.

Demand continues to support SMP, SWP, and MPC85. In contrast, the WPC80 market is beginning to weaken as buyers increasingly resist current prices and more competitive offers appear on the market. The situation in the cheese market is also mixed: cheddar continues to rise in price, Gouda remains stable, and mozzarella has become cheaper.

Milk Powder

Whole milk powder (WMP) is being offered in Europe in the range of 3,800–3,850 EUR/MT. Production has slowed as the growth in milk supply has slowed, and availability on the spot market remains very limited. Demand remains strong, which supports current price levels.

Skim milk powder (SMP) for food use is priced at 3,250–3,300 EUR/MT, while feed-grade SMP is offered in the same range of 3,250–3,300 EUR/MT. Demand remains at a good level, and some buyers still need to secure volumes for the remainder of the year.

SMP availability has decreased as producers are diverting more milk proteins toward the production of MPC, casein, and other higher-value products. Higher prices are attracting more sellers; however, lower SMP production and strong global demand for proteins continue to support the market.

Cheese

Gouda is being offered in Europe in the range of 3,450–3,550 EUR/MT, with Q4 indications at 3,500–3,600 EUR/MT. Following earlier increases, prices have stabilized at current levels.

Edam is priced at 3,300–3,350 EUR/MT. Trading in this cheese remains calmer, and demand is more stable than for Gouda.

Cheddar cheese has risen in price again and is currently offered in the range of 3,700–3,800 EUR/MT. Q4 transactions are taking place at around 3,750–3,850 EUR/MT. Cheddar thus remains on a stronger price trajectory than in previous weeks.

Mozzarella has fallen in price to 3,550–3,600 EUR/MT. Fourth-quarter indications fall within the same range, which represents a slight premium over the spot market.

Grating-grade Emmental is being offered in the 3,500–3,600 EUR/MT range. The market situation remains essentially stable.

Fats

Butter in Europe is being offered in the range of 4,000–4,050 EUR/MT, while fresh European butter for Q4 costs approximately 4,000–4,100 EUR/MT. The market remains weak due to high inventories, and many buyers have already secured their purchasing needs.

Cream prices have fallen again, undermining earlier support for butter. High inventories continue to limit the potential for a more significant rebound in butter prices, and demand has not yet improved enough to shift the overall market balance.

Liquids

Cream is being offered in Europe in the range of 4,700–4,800 EUR/MT. Prices have fallen again as concerns about a sharp reduction in milk availability have eased.

Spot raw milk in Western Europe is priced at around 44.5–48 EUR/100 kg. Milk supply is proving to be greater than previously expected, which has alleviated some of the pressure seen in early September.

Skim milk concentrate (SMC) is being offered in Western Europe in the range of 2,700–2,900 EUR/MT. Prices have fallen, although strong demand for milk proteins continues to influence which products skim milk is directed toward.

Whey concentrate in Europe maintains a strong price position at around 1,400–1,500 EUR/MT.

Whey and Proteins

Sweet whey powder (SWP) for food use is offered in Europe in the range of 1,950–2,000 EUR/MT, while feed-grade material costs 1,700–1,750 EUR/MT. Trading activity has increased as buyers return to the market to secure the remainder of their spot and Q4 supply needs. Finding cheaper SWP is becoming increasingly difficult.

Demand across the entire protein segment remains strong, limiting the availability of surplus SWP. The outlook for sweet whey powder in Q4 remains strong.

WPC80 Instant is being offered in Europe in the range of 24,800–25,300 EUR/MT. The market is beginning to weaken as buyers resist current prices and pressure to sell Q4 volumes is mounting. Producers in Western Europe are maintaining relatively strong prices, while lower offers are coming from Eastern Europe, traders, and suppliers in the U.S.

Instant WPI is priced at 30,300–30,800 EUR/MT in Europe. Demand is subdued as some buyers are adjusting their formulations to reduce WPI usage and are waiting for lower prices. Producers remain reluctant to produce WPI without a sufficiently high premium over WPC80. As a result, the outlook for whey protein isolate remains closely tied to the situation in the WPC market.

MPC85 is being offered in Europe at around 15,350 EUR/MT and remains one of the strongest segments of the milk protein market. Availability for the remainder of the year is very limited, and demand continues to support higher prices.

Whey permeate for food use is priced at 1,050–1,100 EUR/MT in Europe. Supply remains at a good level, but stronger demand has improved market balance. Prices are expected to remain largely stable or strengthen slightly.

Lactose for food use is being offered in Europe in the range of 1,650–1,700 EUR/MT. With the onset of fall, demand related to standardization is weakening, and the good availability of cheaper permeate remains a key factor in the Q4 outlook. The short-term outlook points to prices remaining generally stable or slightly stronger.