![Hard cheeses, high butter prices and climate concerns [269th Edition of DAIRY Newsletter]](https://foodcom.pl/wp-content/uploads/2023/08/Foodcom_SA_Dairy_Newsletter-1520x760.jpg "Hard cheeses, high butter prices and climate concerns [269th Edition of DAIRY Newsletter]")
- Prices of milk powder, especially SMP for food use, are rising rapidly due to limited supply and strong demand, with forecasts for the coming quarters even higher.
- The cheese market remains stable, with a marked increase in mozzarella prices and continued strong demand for Gouda and Cheddar, despite limited stocks.
- Butter and cream prices are rising in response to declining raw milk availability and lower fat yields due to high temperatures.
- Catastrophic floods and droughts in Australia have severely disrupted milk production, which may affect global supply and further increase dairy product prices.
Welcome Partners!
Welcome back to our newsletter!
In the latest edition of our newsletter, we analyse the dynamic changes in the dairy market, paying particular attention to the growing demand for milk powder, the strengthening position of mature cheeses such as Gouda and Cheddar, and the continued increase in butter and cream prices in response to the declining supply of raw milk.
We also report from the Australian market, where catastrophic floods and droughts have severely disrupted milk production, which could affect global dairy availability and prices. This issue is a must-read for anyone following the market from a purchasing, trading or strategic perspective.
Milk powder
Skimmed milk powder (SMP) for food purposes continues its upward trend, with spot trading currently in the 2370-2390 EUR/MT range. Interest in Q3 futures contracts is showing a bid level of around 2475 EUR/MT with offers to sell reaching 2550 EUR/MT, while prices for Q4 are even higher in the range of 2540-2700 EUR/MT. The overall market sentiment remains optimistic, with limited availability of older stock supporting current price levels.
Skimmed milk powder for feed in bulk sales remains stable at 2410 EUR/MT. Market activity is limited and sellers remain cautious. Prices for Q3 are hovering around 2450 EUR/MT, but there are few transactions. Custom SMP for feed is priced at around 2450 EUR/MT with DAP NL delivery for Q3. The market remains shallow, with minimal trading volumes.
Cheese
The gouda market remains stable, with spot prices ranging between 4250-4350 EUR/MT. Q3 futures are priced slightly higher – in the 4300-4400 EUR/MT range. Producers continue to benefit from strong retail demand and limited stocks.
Mozzarella prices have increased, in line with rising seasonal demand. Current spot prices are in the 4300-4400 EUR/MT range, while Q3 levels are slightly lower, reflecting earlier contracts.
Cheddar remains relatively stable. Spot prices currently stand at 4600-4700 EUR/MT, with levels for Q3 slightly softer at 4500-4650 EUR/MT. Despite some difficulties in selling curd immediately, producers are not showing selling pressure, benefiting from steady domestic demand.
Emmental prices remain largely unchanged, currently in the 4950-5150 EUR/MT range. Trading activity is moderate, but price levels are being maintained.
Fats
Butter prices are rising again, reflecting the limited availability of liquid milk and the higher cost of cream. Current price levels are 7250-7400 EUR/MT, also in Q3. With the end of the seasonal production peak, further increases are possible, although long-term contract curves remain flat.
Liquids
Cream prices rose sharply this week to around 8400 EUR/MT. Higher temperatures are affecting the fat content of milk in different parts of Europe, which, combined with healthy demand, is putting upward pressure on prices.
Skimmed milk concentrate (SMC) especially from Germany, has also become more expensive with prices now at 1700-1800 EUR/MT. The main drivers of the increase are improving margins and limited milk availability.
Milk availability is decreasing in major producing countries such as France and Germany. Spot prices for milk and other liquid components are on an upward trend.
Whey powder
Food grade sweet whey powder (SWP) remains in a narrow price range of 975-995 EUR/MT. Demand in Europe is stable, although increasing competition from the US in Asia is cooling export sentiment somewhat.
Feed sweet whey powder in bulk sales remains stable at 840 EUR/MT. However, Q3 futures are on an upward trend with prices in the 890-910 EUR/MT range.
Sweet whey concentrate prices remain unchanged – in the range of 250-350 EUR/MT FCA.
WPC 80 instant continues its slight upward trend, supported by strong demand and limited availability.
WPI 90 remains stable, with balanced supply and steady market interest.
What’s new?
Australia
Australian dairy farmers are facing an unprecedented crisis caused by devastating floods in New South Wales and prolonged drought in Victoria and South Australia. Hundreds of farms have been flooded, thousands of cows have drowned and dairy infrastructure has been destroyed. In regions such as Taree and Manning River, losses are in the hundreds of millions of dollars and many farmers, such as Kevin Schlenert, have lost up to 70% of their herds. In addition, drought in other parts of the country is exacerbating feed and water shortages, leading to a decline in milk production. In response to these events, milk prices in Australia are rising, with Fonterra announcing the opening of the 2025/26 season with a price of AUD 8.60 per kgMS, reflecting the tight market situation. Prime Minister Anthony Albanese warns that recovery from the floods will take months, and the government has launched one-off emergency payments of AUD1,000 for adults and AUD400 for children and extended a 13-week income support program for affected residents. Experts warn that the impact of these extreme weather events could affect global dairy prices, including in Europe, where Australia is a significant exporter. This crisis highlights the growing threat to food security in the face of climate change.
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