European dairy market: cheese, SMP, and cream supported by limited milk availability [316th Edition of the Foodcom DAIRY Newsletter]

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As of early September, various segments of the European dairy market are moving in different directions. Limited milk availability continues to support cheese, SMP, and cream, while butter remains under pressure from high inventories despite strong cream prices.

In the protein market, the situation is more varied. MPC85 remains the strongest performer, and reformulation is prompting buyers to seek alternatives to WPC80.

Milk Powder

Whole milk powder (WMP) is quoted in the range of 3,700–3,800 EUR/MT. Prices remain supported as WMP competes for the same milk components with butter and SMP. When the production of other products is more profitable, the availability of WMP is limited. The market remains stable to slightly firm.

Skim milk powder (SMP) for food use costs 3,050–3,200 EUR/MT, while feed-grade SMP costs 3,000–3,100 EUR/MT. SMP has strengthened again. Lower milk availability, higher prices for skim milk concentrate, and a larger portion of ingredients being directed toward the production of MPC and other milk proteins are limiting the volumes available for powder production. In several cases, feed-grade material is being offered at prices above the food-grade level. Demand remains strong, as SMP continues to offer favorable value compared to other protein ingredients.

Cheese

Gouda is offered in the range of 3,350–3,450 EUR/MT, while Edam costs 3,200–3,300 EUR/MT. The European cheese market remains supported by limited milk availability and strong demand. In the case of Gouda, lower milk collection is leading to reduced production. Trading in Edam is calmer, though limited milk supply is also reducing product availability in this segment.

Mozzarella remains one of the strongest segments of the cheese market and is offered in the range of 3,650–3,700 EUR/MT. Available volumes are limited, and demand continues to support prices.

Cheddar cheese is priced at 3,450–3,650 EUR/MT. Production in Europe is slowing due to seasonal constraints on milk availability, and higher spot milk prices are driving up costs. International competition is limiting the potential for further price increases, although demand remains strong.

Grated Emmental is being offered in the range of 3,450–3,550 EUR/MT, with price differences depending on specifications. Slower seasonal production and reduced availability of low-cost milk are limiting the potential for increased production.

In Q4, price quotes are already higher than on the spot market. Gouda is offered in the range of 3,500–3,750 EUR/MT, and cheddar cheese is offered at 3,550–3,750 EUR/MT. Demand remains strong for this time of year, but the current limited supply of milk is having a greater impact on prices than consumption itself.

Fats

Butter is being offered in the range of 4,000–4,200 EUR/MT. It remains one of the weaker segments of the European dairy market, mainly due to high inventories and increased production. In Western Europe, prices fall within this range, while in Eastern Europe they remain above 4,500 EUR/MT due to lower local availability.

High cream prices are driving up the cost of producing fresh butter, but available inventories continue to limit the potential for more significant price increases.

Liquids

Cream prices have risen again and are currently in the range of 5,250–5,350 EUR/MT. Limited milk availability and increased competition for milk components mean that cream remains one of the strongest segments of the European market. Higher prices are supporting the production costs of fresh butter, and some producers may find selling cream and skim milk concentrate more attractive than further processing.

Spot prices for raw milk have strengthened and are currently in the range of 44–48 EUR/100 kg. Differences stem, among other things, from fat content and delivery terms. Processors have less low-cost milk available for additional production, which is increasingly affecting the costs of powders, cheeses, and cream. If milk procurement remains below typical seasonal levels, spot milk prices will be one of the factors influencing price levels in Q4.

Skim milk concentrate (SMC) is trading at 3,000–3,100 EUR/MT. Availability remains limited, and higher SMC prices continue to drive up SMP production costs, supporting current powder price levels.

Whey concentrate is offered in the range of 1,350–1,450 EUR/MT. Prices remain stable to slightly firm. The use of liquid whey is being influenced by rising protein production, as an increasing portion of the raw material is being directed toward the production of higher-value ingredients.

Whey and Proteins

Sweet whey powder (SWP) for food use in Q4 costs 1,900–2,000 EUR/MT, while feed-grade material is offered in the range of 1,600–1,700 EUR/MT. Quotes for Q4 for feed-grade material are already higher. Processors are increasingly using liquid whey to produce WPC instead of whey powder, which is supporting whey concentrate prices. At the same time, a stronger SMP market has increased buyer interest in whey powders with lower protein content.

WPC80 Instant is being offered in the range of 25,000–27,000 EUR/MT. Sellers in Western Europe are holding firm at higher levels, while greater selling pressure is evident in Eastern Europe. Buyers are resisting current price levels, as they have inventory on hand and cheaper alternatives available. As a result, Q4 negotiations are being delayed, and transaction volumes remain limited. The market is still awaiting a clearer direction.

WPI Instant is priced at 32,000–32,500 EUR/MT. Production in Europe remains limited, and the price premium relative to WPC80 has increased slightly. Availability is improving, but buyers are mainly securing short-term needs, so the market may come under greater pressure later in the year.

MPC85 remains the strongest segment of the protein market and is priced at around 14,000 EUR/MT. Most volumes for the remainder of the year have already been sold. Additional demand for milk proteins is driven by reformulation, as manufacturers are moving away from certain WPC applications.

Whey permeate for food applications costs 1,000–1,050 EUR/MT. Supply remains high, but improved demand from buyers seeking more cost-effective ingredients is supporting the market. Volumes for Q4 continue to be secured.

Food-grade lactose is being offered in the range of 1,600–1,650 EUR/MT. Demand has improved as buyers secure their Q4 needs, and demand related to standardization remains high. Higher permeate costs are also supporting prices. In the near term, prices are likely to remain stable or trend slightly higher.