Start of the year on the dairy market – stabilisation and rebound [294th Edition Foodcom DAIRY Newsletter]

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With the full return of trading activity after the Christmas-New Year period, the first sessions of January show a change in short-term sentiment in selected segments of the dairy market. The period between Christmas and New Year brought significant seasonal price disruptions and exceptionally low price levels in the liquid and spot milk segments. However, the first full trading week of 2026 brings signs of stabilisation and a selective price rebound. Additional support, particularly for dairy powders, has been provided by the recent results of international auctions, as liquidity gradually returns to the market and participants resume normal trading operations.

Despite improved quotations in parts of the category, the overall market picture remains cautious. Availability of raw milk in Europe remains high and pressure on spot milk prices persists, limiting procurement price expectations and continuing to put pressure on processors’ margins. At the same time, on the demand side, a reassessment of the level of supply security for Q1 and early Q2 is evident, leading to more active and bilateral negotiations than at the end of 2025.

Milk powder

The market for skimmed milk powder strengthened markedly after a strong opening to the year on international reference markets. Food SMP prices have recovered to around 2050 EUR/MT FCA in near-term deals, with an increasing number of bids testing levels closer to 2100EUR/MT. Buying activity has clearly increased compared to December, although demand remains selective in terms of volumes.

Feed SMP has followed the increases in the food segment. Current trade talks are in a wide range of 1950-2050 EUR/MT DAP NL, reflecting slightly tighter availability and improved short-term sentiment. However, further upside potential remains dependent on the situation in the liquid segment and the pace of milk purchases in the coming weeks.

Cheese

The cheese market entered the new year on a stable, slightly stronger tone in places. Gouda and Edam are trading in the region of 3000 EUR/MT, with balanced short-term supply and stable buying interest. Cheddar curd remains around 3250 EUR/MT, supported by relatively disciplined production volumes.

At the same time, supply fundamentals remain solid. The seasonal increase in milk availability favours further cheese production, which remains one of the more attractive options for raw material management. In the short term, price pressure is limited, but the market is increasingly attentive to the risk of an increase in stocks of film-ripened cheeses in the later part of Q1, which could affect current price stability.

Fats

Butter prices remain in a relatively narrow range. Spot market activity is concentrated around levels of 4000-4200 EUR/MT, with limited trading pressure on both sides of the market. Current cream price levels indicate that the butter market remains supported more by participant positioning than by current supply and demand fundamentals.

AMF is showing signs of stabilising after a period of elevated volatility, supported by improving demand signals in global markets. However, with milk flows rising and retail activity still cautious, confidence remains limited and buyers continue to avoid long-term contractual commitments.

Fluids

The liquids segment has clearly rebounded after the extremely weak levels seen over the festive period. Cream prices, which had fallen below 3000 EUR/MT at their lowest points, have now returned to the 3400-3600 EUR/MT range. The market expects further normalisation as logistics stabilise and industrial demand returns.

Skimmed milk concentrate has also recovered from the strong end-of-year pressure. After trading close to zero, current market levels are in the 300-400 EUR/MT range. Although volatility remains high, the most intense phase of forced selling seems to be behind the market.

Whey powder

The market for sweet whey powder remains stable. The food product remains around 1100 EUR/MT, while the feed material trades in the 1000-1040 EUR/MT DAP NL range. Demand remains balanced, with no clear price impulses.

Whey concentrate prices rebounded noticeably after the festive period. After very low trades between Christmas and New Year, values have returned to the region of 700-750 EUR/MT as processing plants normalise.

The whey protein segment remains structurally tight and largely independent of the wider dairy market. WPC prices have been rising week-on-week, currently reaching levels around 13 500 EUR/MT, supported by limited availability and stable demand from the food and speciality nutrition sectors.

WPI prices increased for the second week in a row, driven by very limited supply and continued contract demand. Whey proteins remain the strongest market segment entering Q1.

What’s new

Europe

The latest figures from the UK show that dairy cow numbers have fallen to their lowest level on record, with further year-on-year declines and reductions evident across most age groups. Although increases in yields per cow have helped to maintain milk production levels, the shrinking herd base raises questions about the medium and long-term prospects for supply amid continuing price pressures. Structural changes in the herd may affect the balance of the cheese and butter market later in the year.

North America

In the US, a recent survey shows that dairy production costs remain elevated, despite some softening in the prices of selected inputs. Dairy farms continue to struggle to achieve satisfactory economic performance. Projections for 2026 show further downward pressure on milk prices due to herd expansion, highlighting the scale of the challenge facing producers.