Newsletter

Dairy Market: Déjà Vu? Newsletter – March 9, 2026

Thu, 03/05/2026 - 19:02

“The cow gives milk, time makes cheese – and patience sets the price.”

(From the notebook of Antoine, the Cheese Artist.)

Review & Outlook

Milk deliveries across Europe continue to rise, keeping pressure high on spot milk prices and skim milk concentrate. At the same time, product prices are increasing both internationally and within Europe, with the GDT rising another 5.7%. This confirms that dairies are processing no more milk than they can sell and are aligning product prices primarily with farmgate payouts rather than spot prices.

Week 10 delivers a familiar picture: the seasonal price curve of the past two years is repeating itself – rising product prices from mid-February, with an expected peak in summer. Historically, this is the latest point at which Q2 and Q3 hedges should be put in place. Those who wait will typically pay a higher price in May. At the same time, the supply surplus in Europe and ongoing geopolitical uncertainty call for caution – which is why we continue to recommend hedging in tranches rather than all at once.

Milk Deliveries

Germany: +0.3% week-on-week, +6.1% year-on-year (Week 8)

France: +4.6% year-on-year; growth rate slightly declining

United Kingdom: January 2026: 1.37 million tonnes, +4.1% vs. prior year

Liquid Markets

The liquid dairy market remains under severe price pressure. The milk surplus in Northwest Europe is clearly overriding the firmer tone in butter, cheese, and powder markets. This is most visible in skim milk concentrate, which fell by €230 to €475/MT – now trading significantly below whey concentrate, a historically unusual and notable inversion.

Powder Markets

Strong gains were recorded in skim milk powder and especially in whey powder, while lactose was the only product to decline slightly. Despite elevated trading activity and firm prices, demand remains cautious in parts of the market – particularly in the Middle East, where the ongoing conflict is weighing on near-term buying interest.

Milkfat

Despite high butter inventories and strong milk production, prices rose sharply: butter gained €375 to €4,680/MT, while cream surged €860 to €4,995/MT. Market participants attribute this unexpected move primarily to geopolitical sentiment following tensions in the Middle East. However, the underlying fundamentals – high stocks, strong production, and the imminent start of the Irish milk season – argue against a sustained rally.

Cheese

A clear firming trend, with strong gains in Gouda, Mozzarella, and Cheddar, while Emmentaler edged slightly lower. Despite solid spot demand and forward buying for Q2/Q3, sustainability concerns persist: strong production fundamentals and elevated inventories – particularly in naturally ripened Gouda – continue to weigh on the market.

EU-27 Exports to China (2025)

The overall trend was predominantly negative, despite rising total Chinese dairy imports:

Consumer milk (packaged): –19.1%
Packaged cream: –33%
Butter: –11.7%
Cheese: –1.5% (Chinese total cheese imports hit a new all-time record of approx. 200,000 MT)
Whole milk powder: –32.7%
Skim milk powder: –15.6%
Whey powder: +5.1%
Lactose: +29.7%

EU-27 Imports from New Zealand (2025)

The EU imported significantly larger volumes from New Zealand in 2025:

Butter and butteroil (butter equivalent): 22,600 MT – highest since 2016
Cheese: 7,000 MT – a dramatic increase
Whole milk powder: 8,800 MT, +60%

🇨🇭 Switzerland

In Switzerland, the industry organization BO Milch has responded to persistent overproduction (up to +10% in December/January, now approximately +5% year-on-year) by approving additional export subsidies covering 1,325 MT of butter. For the current campaign, a total of 2,000 MT of cream and 4,855 MT of butter are being supported at a cost of approximately CHF 24 million. The organization explicitly cautioned against excessive political activism, characterizing the market as fundamentally robust.

Market Forecasts

Q1 2026

Hedging recommendation completed – positions should be rolled by end of March.

Q2 2026

Gouda: Slightly firmer
Mozzarella: Slightly firmer
Cagliata: Slightly firmer
SMP: Slightly firmer
Butter: Symmetric risk – no recommendation
Whey Proteins: Slightly firmer
WMP: Slightly firmer

Q3 2026

Q3 expected to be broadly stable, in line with prior years.

Gouda : Stable
Mozzarella : Stable
Cagliata : Stable
SMP: Slightly firmer
Butter: Symmetric risk – no recommendation
Whey Proteins: lightly firmer

WMP: Slightly firmer

Q4 2026

Factors supporting higher prices:

Solid demand
Low inventory levels
Strong demand for whey proteins

Key risks:

High cow numbers in New Zealand
Weak USD
EU milk curve tracking 2025 pattern
In recent years, prices have typically declined from October onward

Recommendations

Q3 2026: Continue hedging in tranches, with particular focus on cheese
Q4 2026: Highly uncertain outlook – proceed with caution

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.

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