European Dairy Market: Milk Powder Gains Ground, Butter Remains Under Pressure [Issue 311 of the Foodcom DAIRY Newsletter]

Welcome, Partners!

Welcome back to our newsletter!

In the 311th issue of the Foodcom DAIRY newsletter, we analyze the situation on the dairy products market during the fourth week of July. Market sentiment improved slightly, with increased buying interest focused primarily on milk powder and anhydrous milk fat (AMF). Buyer activity increased particularly in Southeast Asia and Oceania, while demand from North Asia was less pronounced.

However, the rebound does not extend to all segments. Butter and cheddar remain under pressure, and the European market is heavily dependent on weather, milk availability, and raw material costs. High temperatures are limiting cows’ feed intake and affecting milk composition, which is supporting prices for liquid dairy products.

The protein market remains strong but uneven. WPI availability is becoming more limited, WPC80 is losing ground slightly after earlier gains, and MPC85 is showing signs of a mild weakening. Buyers are becoming increasingly cautious about further price hikes and are focusing on securing the volumes they need most.

Milk Powder

Whole milk powder (WMP) is being offered in the range of 3,100–3,200 EUR/MT. Skim milk powder (SMP) for food use is priced at 2,650–2,750 EUR/MT, while feed-grade SMP is offered at 2,650–2,700 EUR/MT for delivery in Q3.

WMP prices have risen as buying interest has improved, particularly in Southeast Asia and Oceania. Lower price levels have encouraged some buyers to return to the market. However, European WMP is not fully following the stronger international trend. Demand remains selective, and limited activity among end-users, along with weaker prospects for butter and SMP, are limiting the potential for further growth.

SMP has also strengthened following an earlier correction. In Europe, reduced milk availability and high processing costs provide short-term support; however, overall supply remains sufficient, and purchasing activity for immediate delivery is limited.

Stronger demand in international markets does not necessarily translate directly into higher prices in Europe. The future direction will depend on whether purchasing activity continues and on how long high temperatures will limit feed intake and milk supply.

Cheese

Gouda is being offered in the range of 3,050–3,150 EUR/MT, while Edam prices range from 3,000 to 3,100 EUR/MT. Mozzarella remains at a strong level of 3,400–3,500 EUR/MT, and bulk Cheddar is available in the range of 3,300–3,400 EUR/MT.

The cheese market is moving in different directions. Cheddar remains under significant pressure due to rising production in Europe and the United States, while the mozzarella market is showing greater strength.

In Europe, reduced milk availability and higher raw material costs on the spot market are keeping production costs elevated. This limits the possibility of lower offers, particularly for Gouda, Edam, and mozzarella.

Not all buyers of Gouda and Mozzarella have yet secured their full demand for July and August, which gives sellers more leeway to maintain their asking prices. Further market strengthening remains possible if high temperatures continue to limit milk supplies. However, a faster recovery in procurement following an improvement in weather conditions would reduce the potential for price increases.

The European market for Cheddar cheese curd remains more stable than international trade, but rising production in Europe and the United States continues to put pressure on export flows.

Fats

Butter is being offered in the range of 3,800–4,000 EUR/MT. Reduced milk availability provides short-term support, but the overall market balance remains tight. Inventories remain at historically high levels, many buyers are already well-stocked, and demand for immediate delivery is limited.

Cream availability remains high as production is rising in both Europe and the United States. This limits the potential for a sustained rebound in butter prices, even as weather conditions temporarily support the European market.

The outlook for the second half of the year continues to point to the possibility of a gradual weakening. Slower production growth or changes in international trade flows could limit the pace of declines, but a sustained improvement would require significantly stronger demand.

Liquids

Cream and skim milk concentrate (SMC) remain at high levels, as hot weather continues to affect cows’ feed intake and milk component content. Cream is being offered in the range of 4,150–4,400 EUR/MT, while SMC prices range from 3,100 to 3,200 EUR/MT.

Raw milk on the spot market costs around 40 EUR/100 kg in major European regions, with some quotes exceeding 50 EUR/100 kg. These levels are maintaining cost pressure on producers of milk powders and cheese.

The current strength of the liquid dairy market stems primarily from weather conditions. If high temperatures persist, milk supply may remain limited. However, a faster return of procurement to normal levels could quickly weaken this support.

Whey concentrate remains strong and is being offered in the range of 1,450–1,550 EUR/MT. Dairy plants continue to focus on producing products with higher protein content, which means less liquid whey is being used to produce standard whey powder. This keeps production costs for sweet whey powder high, despite limited buying activity.

Whey and Proteins

Sweet whey powder (SWP) for food use is offered in the range of 1,700–1,800 EUR/MT, while prices for feed-grade material range from 1,400 to 1,450 EUR/MT. The European SWP market remains largely stable.

A significant portion of demand for Q3 and Q4 has already been secured, which is limiting current purchasing activity. High prices for liquid whey continue to support the market, but demand is not strong enough to trigger a significant price increase.

WPC80 Instant is being offered in the range of 26,500–27,500 EUR/MT. After a prolonged period of price increases, prices have fallen slightly. Availability has improved slightly, but total volumes remain limited, and buyers are showing increasing resistance to current price levels.

WPI Instant remains at 31,000–31,500 EUR/MT. Availability is becoming more limited as some production capacity is being redirected toward WPC80. Demand remains strong, although buyers are increasingly reluctant to accept further price increases.

MPC85 is being offered in the range of 11,500–12,000 EUR/MT following a slight decline. The market continues to be supported by demand for milk proteins and efforts to reformulate products. MPC85 is also being considered as an alternative in applications where lactose availability remains limited.

European food-grade whey permeate is offered in the range of 1,000–1,050 EUR/MT. Prices are supported by lower production in Europe, although global supply remains high. The future trend will depend in part on the price difference between permeate and SWP. The greater the difference, the more likely buyers are to use permeate as a substitute.

Food-grade lactose is being offered in the range of 1,550–1,650 EUR/MT. Prices have risen, European production remains limited, and a portion of future volumes has already been contracted for Q4.

The protein market remains strong but mixed. WPI supply is becoming tighter, WPC80 availability has improved slightly, and MPC85 has weakened slightly. Long-term demand for high-protein products continues to support prices, though purchasing decisions are becoming increasingly selective.