Dairy Market: Crash? Newsletter 30-3-2026
The richer the flower meadow, the finer the cheese. (From the notebook of our Antoine, the Cheese Artist.)
Review & Outlook
Led by cream and butter, almost all prices have retreated after several weeks of gains. One week of declining prices is a consolidation, not a trend. That said, one must not forget that the global economy is on the brink of recession — and the longer the war in the Middle East continues, the more likely a global recession becomes. In that scenario, what is currently a consolidation could turn into a trend.
Those who followed our recommendations in February and early March have hedged Q2 and Q3 in tranches at lower levels and now hold a solid hedging base.
Considering current price levels, we are adjusting our strategy: for remaining open volumes, we recommend waiting selectively for short-term dips and using these to add further cover. Those wishing to fully eliminate their risk may hedge remaining Q2 volumes now; for late Q3, a wait-and-see approach remains tactically preferable.
Milk deliveries — Week 11
- Germany: Strong increase +0.5% week-on-week, +7.1% year-on-year
- France: +5.5% above prior-year week
Milk deliveries Jan–Feb 2026
- Poland: +2.5%, Jan–Feb +3.5%
- Netherlands: +5.4%, Jan–Feb +5.6%
- USA: +2.9%, Jan–Feb +3.2%
- New Zealand: +6.0%, Jan–Feb +3.7% vs. prior year
Liquid Markets
The European spot milk market is trading at historically low levels in week 13. The fact that skimmed milk concentrate and whey concentrate are both quoted at €815/t illustrates the severity of the current oversupply situation.
Cheese Markets
European cheese prices showed a broad downward correction in week 13. Market sentiment remains cautious. Mozzarella is moving within the EU, while export activity is weakening; Cheddar continues to soften, and buyers are acting with considerable caution given uncertainty around post-Easter demand. Inventories at producer level are historically low for this time of year, so a short-term post-Easter demand dip is unlikely to trigger panic.
Powder Markets
Dairy powder markets present a mixed picture: food-grade SMP is edging higher, while feed SMP and WMP are easing, though both remain 5–10.5% above last month's levels. At the same time, whey powder prices are rallying strongly (food-grade approx. €1,500/t, feed-grade €1,450/t), driven by firm WPC/WPI prices and intensifying competition with SMP for drying capacity.
Milkfat
The milkfat market is under significant pressure at end of March: cream has corrected sharply, butter more moderately. High stock levels, strong milk supply and fading Easter demand are likely to sustain downward pressure in the weeks ahead. Trader offers at low levels are already circulating, and May/June prices are trending softer.
Kieler Rohstoffwert (ife) — March 2026 The ife commodity value for milk rose in March 2026 but remains well below 2025 levels, supported by sharply rising SMP prices and a modest uptick in butter prices.
37.8 cts/kg vs. February 2026: +11.5% | vs. March 2025: –25.3%
EU-27 Dairy Cow Herd 2025 — Stabilisation
Total herd: 19.1 million head, –0.7% year-on-year. Increases: Germany (+0.2%), Belgium (+0.8%), Denmark (+1.0%), Estonia (+2.3%), Ireland (+0.6%), Italy (+0.4%), Austria (+0.1%), Sweden (+1.9%) Declining: Czech Republic (–4.8%), Greece (–4.7%), Malta (–5.3%), Slovenia (–3.4%), Bulgaria (–2.6%), Netherlands (–0.6%), Poland (–0.7%), Spain (–1.6%), Finland (–1.5%)
EU-27 Dairy Product Exports — January 2026 Significantly higher exports in cheese, SMP, milk/cream, condensed milk and butter, while whey powder edged below prior-year levels. Noteworthy is the recovery in butter exports and continued growth in SMP.
- Cheese: +6.1%
- Skimmed milk powder (SMP): +8.8% vs. January 2025
- Milk and cream: +19.6%
- Whey powder: –3.1%
- Condensed milk: +1.3%
- Whole milk powder (WMP): +/– 0%
- Butter (incl. butteroil in butter equivalent): +20.0%
Switzerland
In response to the partial market liberalisation for dairy products — which primarily affected the cheese sector — Swiss policy has favoured the milk powder industry for three decades, leaving cheese largely neglected. It was only after the two major powder manufacturers failed that the realisation set in: the cheese sector needs stronger support.
The industry is calling on policymakers for concrete action:
- An increase in the cheese processing premium to compensate for the absence of border protection
- Development of a direct payment system that strengthens milk production
- No cuts to promotional measures for Swiss dairy products
The promotional support is well-intentioned — but in our private assessment, of limited effectiveness. Our recommendation to policymakers: redirect these funds systematically towards supporting silage-free milk production (Blumenwiesenmilch). This is the foundation of exportable Swiss cheese culture. Those who genuinely want to strengthen the cheese sector should invest in raw material quality, not advertising.
The milk crisis — a structural oversupply since October 2025 — is currently weighing heavily on both the market and the political debate. The following operational response package has been adopted:
- Reduction of the A reference price by 4 centimes (February 2026)
- Cap on milk deliveries at 105%
- Export subsidies for 4,855 tonnes of butter and 2,000 tonnes of cream
- Appeal to the trade to stock more Swiss dairy products
The underlying problem runs deeper: policymakers react — they do not act proactively. A forward-looking cheese strategy could have been developed long ago.
Recommendations
Uncertainty is increasing due to the war in the Middle East.
Q1 2026: Hedging complete — positions should have been rolled by end of March.
Q2 2026
- Gouda / semi-hard cheese: stable, upward tendency
- Mozzarella: stable, upward tendency
- Cagliata: stable, upward tendency
- SMP: slightly firmer, uncertain outlook
- Butter: volatile, currently on the softer side, stable over the longer term
- Whey proteins: firmer (WPC80 and WPI in strong demand)
- WMP: stable
Q3 2026 (broadly stable, in line with prior years)
- Gouda / semi-hard cheese: stable, potential weakness in September
- Mozzarella: stable, potential weakness in September
- Cagliata: stable, potential weakness in September
- SMP: slightly firmer, potential weakness in September
- Butter: remains volatile, underlying trend broadly stable
- Whey proteins: slightly firmer (WPC80 and WPI in strong demand)
- WMP: stable, potential weakness in September
Q4 2026
Factors supporting higher prices:
- Solid demand
- Low inventories
- Strong demand for whey proteins
Risks:
- High dairy cow numbers in New Zealand
- Weak USD
- EU milk curve similar to 2025
- Prices in recent years have typically declined from October onwards
Hedging Recommendations
- Q2 2026: Hedge remaining volumes on dips
- Q3 2026: Current price levels make hedging unattractive. Hedge remaining volumes on dips only. Price weakness in September is possible.
- Q4 2026: Clear non-recommendation for hedging — await Q3 developments first. Downside risk is assessed as greater than upside potential. Those wishing to reduce Q4 exposure should limit cover to small volumes via options or tranches.
Strategic Outlook – “Strategy Beats Opportunism”
Milk volumes may grow only modestly in 2026 and could decline again in 2027. Now is the ideal time to secure your supply base on a long-term basis – to ensure availability when production tightens.
Whether producer or processor – we bring market intelligence, reliable partnerships, and Swiss quality expertise to help your business grow.
Our Trade Fair Presence 2026
- Tutto Food Milano – 11–14 May 2026
- Salon du Fromage, Paris – 7–9 June 2026
- Summer Fancy Food – 28–30 June 2026
- SIAL Paris – 17–21 October 2026
- World Cheese Awards, Córdoba – 12 November 2026
- Marca Bologna – 13–14 January 2027
Treat yourself to a genuine Swiss raw‑milk flower meadow cheese not just a pleasure, but a small piece of joy for the soul.
Warm regards, Affineur Walo
This forecast is based on our market knowledge. It does not constitute a definitive prediction and we accept no liability should it prove incorrect.
