European dairy market: cheese prices rise; SMP and WMP above summer levels [Issue 313 of the Foodcom DAIRY Newsletter]

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In the 313th issue of the Foodcom DAIRY newsletter, we take a look at the situation on the European dairy market in early August. The market is stronger than usual for this time of year, particularly in the cheese segment, where interest in Q4 volumes is growing. SMP and WMP remain above the levels recorded earlier this summer.

The situation in the butter market has calmed down somewhat, but high inventories and good availability continue to limit the scope for more significant price increases. Spot milk prices have fallen compared to the beginning of summer, which has partially reduced cost pressures on production.

Weather continues to play a significant role, especially for liquid dairy products. In the coming weeks, the market’s direction will depend primarily on milk availability and the development of purchasing activity in August.

Milk Powder

Whole milk powder (WMP) is being offered in the range of 3,400–3,500 EUR/MT. Skim milk powder (SMP) for food use is priced at 2,800–2,900 EUR/MT, while feed-grade SMP is priced at 2,650–2,700 EUR/MT.

WMP remains above the levels seen earlier in the summer, though trading remains relatively quiet. However, international demand is strong enough to support current price levels.

Further price increases in Europe are limited by competition from other regions. In the second half of the year, global WMP supply may increase, particularly if Chinese purchases begin to slow down.

SMP has strengthened amid reduced availability of cheaper raw material for drying. Production costs are also supporting prices. Market activity remains limited, but there are no clear signs of oversupply.

If milk availability and buyer activity do not change significantly, prices may remain relatively stable in the near term.

Cheese

Gouda is being offered in the range of 3,250–3,350 EUR/MT, and Edam in the range of 3,100–3,200 EUR/MT. The beginning of August saw lower activity on the European cheese market, but prices are holding up better than usual for this time of year.

Interest in Q4 volumes is growing, particularly from larger industrial buyers. Forward prices remain above current spot levels.

Mozzarella is priced at 3,500–3,600 EUR/MT and continues to benefit from seasonal demand. Sellers are holding firm on their offers, and interest in Q4 deliveries is growing. Later in Q3, however, prices may weaken slightly as seasonal demand declines.

Cheddar cheese is available in the range of 3,350–3,450 EUR/MT. High milk availability earlier in the season led to high production, and some inventory is still awaiting sale. Cheddar remains attractive relative to other cheeses, and additional production has already slowed as the availability of cheap spot milk has decreased.

Emmental is being offered at 3,550–3,650 EUR/MT. Inventories built up during the period of higher production are gradually being reduced, which may help keep prices fairly stable in the near term.

Cheese production remains profitable compared to some other uses of milk, which helps maintain high production levels. On the other hand, growing interest in Q4 and uncertainty regarding future milk supply are causing producers to be more cautious about selling large quantities well in advance.

Fats

Butter is being offered in the range of 3,900–4,000 EUR/MT. The market has stabilized somewhat, but there are no clear signs of a stronger rebound yet.

Availability is good following high production earlier in the year. Older stocks continue to compete with fresh butter, and current buying activity remains limited.

In the short term, cream prices and weather will be key factors. If milk supply tightens again, fresh butter could receive additional price support. If milk supplies improve, this effect may weaken.

The outlook remains cautious. Increased purchasing activity could help keep prices stable, but a more pronounced rebound would likely require an increase in consumption or a reduction in production.

Liquids

Cream is trading in the range of 4,000–4,100 EUR/MT in major Western European markets, though prices are higher in some regions. Its price level remains heavily dependent on milk supply and weather conditions.

Spot prices for raw milk have fallen and typically cost less than 40 EUR/100 kg in major markets. This is lower than earlier in the summer, which partially reduces direct cost pressure on dairy production.

Skim milk concentrate (SMC) is offered in the range of 2,650–2,750 EUR/MT. Its availability continues to affect SMP production costs.

Whey concentrate costs 1,400–1,500 EUR/MT. An increasing proportion of raw material is being diverted to the production of higher-value protein products, leaving less liquid whey available for standard powder production. This helps keep whey concentrate prices strong.

Whey and Proteins

Sweet whey powder (SWP) for food use is offered in the range of 1,800–2,000 EUR/MT, while feed-grade material is offered in the range of 1,400–1,450 EUR/MT. Prices remain at current levels, supported by raw material costs, although buyers are taking a selective approach to purchases.

WPC80 Instant is priced at 26,500–27,000 EUR/MT on European markets. Availability has improved slightly, but volumes remain limited, and buyers are more cautious about current price levels.

WPI Instant remains at 31,000–31,500 EUR/MT. Availability remains limited, as part of the production capacity is being used to produce WPC80. Interest remains strong, but further price increases would require another reduction in supply.

MPC85 is offered in the range of 12,300–12,800 EUR/MT. Current price levels are supported by demand for high-protein ingredients.

Whey permeate for food applications is priced at 1,000–1,050 EUR/MT. Availability in Europe is limited, while greater supply on the global market is holding back further price increases. The lower price relative to whey protein isolate may continue to encourage the use of permeate as a substitute wherever possible.

Food-grade lactose is being offered in the range of 1,550–1,650 EUR/MT. Production in Europe remains limited, and a portion of future volumes has already been secured.

The protein market remains strong, though the situation varies by product. Buyers are becoming increasingly selective in their purchasing decisions.