Short bounce or longer market cooling? An update from the dairy sector [288th Edition Foodcom DAIRY Newsletter]

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The dairy market remains under clear supply pressure. High milk production in Europe and Oceania and limited exports are keeping prices of most products in a downward trend. The only stabilising factor remains the weaker euro, which temporarily supports foreign sales. Looking ahead to the end of the year, low trade activity and a gentle further weakening of prices will prevail before the market starts to balance on the supply side in early 2026.

Milk powder

Milk powder prices remain stable at low levels. Skimmed milk powder (SMP) is trading in the €2,020-2,100/MT range, with slightly more interest from overseas buyers. Exporters are benefiting from the exchange rate effect, which improves margins and facilitates export contracts in US currency.

Whole milk powder (WMP) is losing some ground, with prices falling to €3,400-3,450/MT, reflecting increasing raw material availability and a correction following recent global auctions. Continued high production in Oceania and Europe means that the market remains under supply pressure. In the short term, no major changes are seen, with trade activity clearly weakening as the year draws to a close.

Cheese

After a period of weakness, the cheese market is showing signs of a short-term recovery. Spot prices have increased slightly, particularly for November and December deliveries, while trading activity in January remains limited.

Gouda and mozzarella are trading around €3,000/MT, indicating a balance between limited supply and moderate demand before the end of the year. Some producers are limiting current sales, hoping for a price rebound in early 2026.

Cheddar remains around €3,500/MT and Emmental remains more expensive, around €4,000/MT. However, an increase in stocks in warehouses may lead to a correction in the following weeks. Overall, the cheese segment remains stable, with the market moving within a narrow price range with low cost pressure.

There has also been a noticeable increase in demand for cagliata in recent weeks, which has supported more intensive activity on the spot market and confirmed an improvement in the short-term demand dynamics.

Fats

Butter in Europe is currently priced in the EUR 4 900-5 100/MT range. After a short period of stabilisation, the market is again losing momentum, due to the high availability of raw material and limited exports. Differentiation between local markets remains evident, with quarterly contract prices near current levels in early 2026, suggesting an expectation of further stabilisation rather than a rebound.

Milk fat (AMF) remains in the €6,000/MT region, with a slight downward trend. Global oversupply of milkfat and lower trade activity limit upside potential in the short term.

Liquids

The market for liquid dairy components remains well supplied. Cream has started to cheapen after an earlier price increase. Quotations are currently at EUR 5,800-5,900/MT. The decline is due to a seasonal weakening of demand in the confectionery and catering industries, as well as continued high milk production.

Milk volumes are now starting to fall slightly and lower payments to farmers may help to achieve a better balance between supply and demand towards the end of the year.

Milk concentrates remain in a slight upward trend. Skimmed milk concentrate (SMC) is trading in the €1 200-1 400/MT range, while whey concentrate remains in the €650-750/MT range. The availability of raw material is good and processors are mostly utilising capacity at full capacity.

Whey powder

The dairy protein segment remains one of the strongest areas of the market. Feed and food whey maintain stable prices at EUR 980/MT and EUR 1 050-1 100/MT respectively. High quotations also persist for highly concentrated proteins, with WPC 80 costing EUR 12 200-12 800/MT and WPI reaching as high as EUR 20 000/MT.

Demand for high-protein products remains strong in both Europe and Asia, supported by the functional and sports food trend. Limited raw material availability on the US side further maintains pressure for high prices in this segment.

What’s new?

Globally

Global food prices fell in October for the second consecutive month, the UN FAO reported. The global price index fell to 126.4 points from 128.5 points in September, already more than 20 per cent lower than the record high in March 2022. Sugar was the hardest hit, with prices falling to their lowest level since 2020 thanks to a strong harvest in Brazil and a good outlook in Asia. Dairy products and meat, especially poultry and pork, also fell in price, while beef and vegetable oils rose in price. At the same time, the FAO raised its global cereal production forecast for 2025 to a record high of almost 3 billion tonnes, which is expected to help further stabilise the food market.

Europe

Arla Foods has completed a pilot programme testing the feed additive Bovaer, which was claimed to reduce methane emissions in dairy cows by up to 45%. The test was conducted on 30 farms in the UK and the company is now analysing the results before deciding whether to roll it out on a larger scale. Although the research indicates that the measure is safe and effective, there has been controversy surrounding the project. Some members of the public are concerned about interference with natural breeding processes and are calling for greater transparency. Arla stresses that its aim is to reduce the climate impact of milk production, but that decisions on the next steps will only be made after a review of the test results is completed.