European Dairy Market: Limited Milk Supply Boosts Cheese and Butter Prices [Issue 309 of the Foodcom DAIRY Newsletter]

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In the 309th issue of the Foodcom DAIRY newsletter, we take a look at the situation on the European dairy market during the second week of July. A stronger market tone is particularly evident in the cheese, butter, skim milk concentrate, and raw milk segments on the spot market.

The main factor influencing the market remains the heat wave, which has limited milk collection and degraded milk quality in several regions. As a result, the availability of raw milk has decreased, and producers’ bargaining power has strengthened.

Cream prices remained largely stable, while whole milk powder showed only moderate changes. The future direction of the European market will largely depend on the duration of the high temperatures and their impact on milk supplies.

The situation in Europe contrasts with the weaker tone in the global market. Prices for skim and whole milk powder, cheddar cheese, butter, anhydrous milk fat, and lactose fell, while mozzarella and buttermilk powder posted gains.

Milk Powder

Whole milk powder (WMP) on the spot market is being offered in the range of 3,250–3,350 EUR/MT. Compared to other market segments, this product has shown only moderate changes.

Prices for skim milk powder (SMP) for food use remain at 2,700–2,800 EUR/MT FCA. The lower end of the range has increased compared to the previous week, but market activity remains limited.

Skim milk powder for feed purposes is being offered in the range of 2,650–2,700 EUR/MT for delivery in the third quarter. Prices are trending upward despite limited buying activity.

Cheese

Spot prices for Gouda cheese currently stand at 3,100–3,200 EUR/MT, while third-quarter indications are at a higher level of 3,150–3,250 EUR/MT. Edam is being offered in the range of 3,100–3,150 EUR/MT, which is in line with the stronger tone of the European semi-hard cheese market.

The price pressure observed in June has eased. Reduced milk availability and deteriorating milk quality are shifting the balance of power in negotiations. Producers may take a more selective approach to sales and are less inclined to lower prices. At the same time, the availability of discounted spot lots is becoming increasingly limited, which means higher costs for buyers who had previously postponed their purchases.

Mozzarella remains the strongest segment of the cheese market, with spot prices ranging from 3,300 to 3,450 EUR/MT. This category is supported by seasonal demand from the foodservice sector, shorter production cycles, and the redirection of milk fat toward the production of fresh products amid lower milk supplies.

Cheddar cheese is being offered in the range of 3,200–3,300 EUR/MT. Limited milk availability is beginning to affect supply volumes and ingredient ratios, and producers are less willing to make further price concessions.

Prices for Emmental intended for grating range from 3,300 to 3,400 EUR/MT. Trading activity in some segments remains limited, but the overall tone of the hard cheese market is strengthening.

Further price increases in August and September remain possible if the heat wave continues to limit milk availability. Conversely, a faster return of supplies to normal levels following a drop in temperatures could reduce the potential for further increases.

Fats

Spot prices for butter range from 3,800 to 4,000 EUR/MT, with the main trading range in key European markets at 3,850–3,950 EUR/MT FCA. Projections for the third quarter are less uniform and generally fall within the range of 3,800–4,000 EUR/MT, although offers above 4,000 EUR/MT appear sporadically.

Butter continues its upward trend. The market is supported by reduced milk availability, while cream prices remain high. The future direction will be closely tied to the duration of the heat wave and its impact on European milk collection.

Liquids

The weekly price range for cream was 4,100–4,400 EUR/MT FCA, based on a price basis corresponding to 100% fat. At the beginning of the week, quotes hovered around 4,100–4,400 EUR/MT and subsequently stabilized in the 4,100–4,200 EUR/MT range.

The cream market remains stable at a high level. The ongoing heatwave may continue to support this stability, though renewed upward pressure on prices is also possible.

Skim milk concentrate (SMC) strengthened to 3,100–3,200 EUR/MT, with individual offers reaching 3,500 EUR/MT. Prices for skim milk ranged around 30–33 EUR/100 kg.

Spot market prices for raw milk rose significantly and returned to around 40 EUR/100 kg in the major European markets. Occasional offers exceeding 50 EUR/100 kg were also reported.

Following an earlier increase, whey concentrate prices stabilized in the range of 1,400–1,500 EUR/MT FCA.

Whey and Proteins

Sweet whey powder for food use is being offered in the range of 1,600–1,700 EUR/MT, with prices showing a slight increase. Prices for SWP for feed use range from 1,350 to 1,450 EUR/MT for July delivery and remain stable or are rising slightly.

Lactose is offered at around 1,600–1,700 EUR/MT. The situation in this segment remains more balanced than in the market for products with higher protein content.

WPC80 prices range from 25,500 to 26,000 EUR/MT, while WPI90 is offered in the range of 29,000–30,000 EUR/MT. Both products remain significantly more expensive than standard whey derivatives, reflecting the stronger market position of high-protein dairy ingredients.

Global whey trade volumes remain largely stable, while the value of trade continues to grow. This segment is supported by growing demand for high-protein products.