The European Dairy Market: High Protein Prices and the Risk of Falling Butter Prices [Issue 310 of the Foodcom DAIRY Newsletter]

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In the 310th issue of the Foodcom DAIRY newsletter, we take a look at the situation on the European dairy market during the third week of July. Persistently high temperatures continue to limit milk supply and reduce the content of its components, which is driving up raw milk prices on the spot market and providing short-term support to the market.

At the same time, the outlook for the second half of the year remains under pressure. High butter inventories, the availability of skim milk powder, and limited demand for whole milk powder are reducing the potential for price increases.

Milk protein prices remain at high levels. WPC80 Instant and MPC85 are showing signs of stabilization, the supply of WPI Instant is becoming more limited, and the lactose market is supported by its limited availability.

Milk Powder

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

Reduced milk availability in the short term is supporting SMP prices, though supply pressure persists in the market. The level of approximately 2,500 EUR/MT, which marks the lower limit of production profitability, may limit further declines. This support would weaken if lower milk prices also led to a decline in skim milk concentrate costs. A return to the lows recorded in 2024 currently seems unlikely.

The outlook for WMP for the second half of the year points to price stabilization or a decline. Weaker expectations for the butter and SMP markets limit the potential for price increases. Seasonally lower supply may provide temporary support, but this effect may weaken starting in Q4 as the new production season progresses.

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, while Cheddar cheese is offered in the range of 3,300–3,400 EUR/MT.

Prices for European cheeses remain largely stable. Reduced milk availability and deteriorating milk quality are keeping production costs elevated. At the same time, higher raw milk prices on the spot market limit the possibility of lower offers.

Further market strengthening in August remains possible if high temperatures continue to limit milk supplies. However, a faster recovery in milk procurement following a drop in temperatures would reduce the potential for further price increases.

Fats

Butter is being offered in the range of 3,800–4,000 EUR/MT. Reduced milk availability is supporting prices, but supply pressure persists in the market. Inventories remain at historically high levels, buyers have already secured a significant portion of their needs, and demand for immediate deliveries is limited.

The outlook for the second half of the year points to the possibility of a gradual market softening. Year-over-year production growth may slow due to the high base from 2025, while changes in international trade flows may partially ease the pressure on European exporters. These factors may slow the pace of declines, but a sustained recovery would still require stronger demand.

Liquids

Cream and skim milk concentrate (SMC) remain at high levels as the heat wave continues to limit milk collection. Cream is being offered in the range of 4,150–4,400 EUR/MT, and SMC prices are 3,100–3,200 EUR/MT. Raw milk prices on the spot market are also rising, which is maintaining cost pressure on producers of milk powders and cheese.

The whey concentrate market remains strong, with prices ranging from 1,450 to 1,550 EUR/MT. Dairy plants are focusing on the production of high-protein products, which means less liquid whey is being used to produce standard whey powder. This keeps the production costs of sweet whey powder high.

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 are supporting the market, but current 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. Following a prolonged period of increases, the latest weekly change was slightly downward. Availability has improved slightly following a period in which producers directed a larger portion of their output toward WPI. However, total volumes remain limited, and buyers are showing increasing resistance to current prices. The shift of part of production back toward WPC80 toward the end of Q3 may support the market in the fall.

WPI Instant remains at 31,000–31,500 EUR/MT. On a weekly basis, prices remained stable, though availability is becoming more limited as some production capacity is being reallocated to WPC80. Demand remains strong, although buyers are increasingly reluctant to accept further price increases.

MPC85 prices have fallen slightly to 11,500–12,000 EUR/MT. 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 certain applications where lactose availability remains limited.

European food-grade whey permeate has risen in price to 1,000–1,050 EUR/MT. Prices are supported by lower production in Europe, although global supply remains high. The situation on the European market 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.

The market for food-grade lactose remains strong, with prices at 1,550–1,650 EUR/MT. Production is limited; some future volumes have already been contracted for Q4, and contract demand remains active. The market is also supported by demand from milk powder producers. However, the growing use of milk proteins, maltodextrin, and sugar as substitutes may limit further price increases.