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Dairy Market: Diverging Prices? Newsletter – 23 February 2026

Thu, 02/19/2026 - 18:30

"A cheese is the patience of the mountains in a form you can carry." (from the notebook of Antoine, the Cheese Artist.)

Market Review & Outlook

Milk volumes in Europe continue to rise. Spot milk prices have fallen to just under €0.16/kg, and liquid cream prices have also declined – currently around 30% below the butter-price equivalent. At the same time, spot markets are showing firm, stable notations, and the majority of contacts reported stable prices for March.

This apparent contradiction is explained by the high farmgate prices paid by dairies (€0.37–0.50/kg) and fully utilized processing capacities. If these costs must be covered, processed product prices cannot fall significantly.

An early, flat milk peak is expected. For Q2 and Q3, we anticipate stable to slightly firming prices – except for Emmental/hard cheese, where momentum is lacking. Given tight cheese inventories, downside risk appears smaller than upside risk; we therefore recommend hedging both quarters gradually in tranches.

Pressure may increase in Q4:

EU production could pick up earlier than usual.
Very low cow slaughter rates in New Zealand point to higher milk volumes ahead.

Milk Deliveries

Germany (Week 6): +0.3% vs. prior week; +5.6% vs. prior year
France (Week 6): +5.8% vs. prior year

Shifting Product Mix

Fresh cheese: +4.6% (record share)
Organic cheese: +7.0%
Semi-hard cheese: –1.7%
Pasta Filata: –1.5%
SMP production: +14.8% (highest level since 2020)

GDT Auction – February 17, 2026

The GDT Index rose +3.6% compared to the previous tender (following +6.7% on February 3, 2026). All products gained except Cheddar:

Butter: +10.7%
SMP: +3.0%
WMP: +2.5%
Mozzarella: +5.0%
Lactose: +7.8%

This marks the fourth consecutive GDT increase. Despite this, overall market sentiment remains bearish, driven primarily by rising global milk production. Futures markets are painting a mixed to slightly weaker picture.

FrieslandCampina – Full Year Results 2024

Despite a challenging environment for commodity dairy products, FrieslandCampina delivered its best results in five years, driven by strong performances in Specialised Nutrition and Ingredients, combined with disciplined cash management – resulting in a final payment of €1.31 per 100 kg of milk. The largest division by revenue, Professional, posted a loss of −€70 million, absorbing the full brunt of market volatility.

Outlook: Pressure is expected to remain high in H1/2025 due to global oversupply; improved conditions are anticipated from H2/2025 onward. Integration costs from the Milcobel merger will provide an additional headwind in 2025.

🇨🇭 Switzerland

The 2025 production data has been released. The milk delivery curve followed a similar pattern to Europe: an early, strong increase in autumn. Annual average: +2.8%; deliveries were still declining at the start of the year, but surged +8.9% in December. January and February remained high; processing capacities were temporarily insufficient, leading to larger volumes being diverted to biogas facilities.

Cheese Overview:

Fresh Cheese / Quark

Production: +21.1% (21,241 t vs. 17,540 t)
Exports: +16.4% (15,157 t vs. 13,026 t) Domestic consumption growing strongly.

Appenzeller

Production: −0.2% (8,075 t vs. 8,090 t)
Exports: +2.7% (4,218 t vs. 4,107 t) Previously elevated inventories have been reduced.

Raclette

Production: −3.6% (16,613 t vs. 17,230 t)
Exports: −6.1% (3,229 t vs. 3,438 t) Market is in balance.

Emmental AOP

Production: +3.8% (12,867 t vs. 12,395 t)
Exports: −3.7% (7,653 t vs. 7,945 t) Inventory build-up underway.

Gruyère AOP

Production: +1.7% (30,817 t vs. 30,311 t)
Exports: −7.4% (12,079 t vs. 13,047 t) Inventories are building; domestic consumption held up well thanks to promotional pricing, but stocks are full and a production reduction is inevitable. Gruyère exports have been almost exclusively U.S.-driven for years – accordingly, the 2025 U.S. tariffs hit this variety hardest.

Switzerland Swiss

Production: −10.9% (4,964 t vs. 5,572 t)
Exports: −13.0% (3,044 t vs. 3,505 t) Inventories are tight.

Price Forecasts

Q1 2026

Gouda / Semi-hard: stable to slightly firmer
Mozzarella: stable to slightly firmer
Cagliata: stable to slightly firmer
SMP: firmer to slightly stronger
Butter: stable to slightly stronger
Whey proteins (WPC80): firm, with further upside possible
WMP: stable to slightly firmer

Q2 2026

Gouda / Semi-hard: stable to slightly stronger
Mozzarella: stable to slightly stronger
Cagliata: stable to slightly stronger
SMP: stable to slightly firmer
Butter: sideways; potentially softer after Easter
Whey proteins: stable to slightly firmer
WMP: stable to slightly firmer

Q3 2026

Gouda / Semi-hard: stable to slightly stronger
Mozzarella: stable to slightly stronger
Cagliata: stable to slightly stronger
SMP: stable to slightly firmer
Butter: sideways to slightly firmer
Whey proteins: stable to slightly firmer
WMP: stable to slightly firmer

Q4 2026 Factors supporting higher prices:

Solid demand
Low inventories
Strong demand for whey proteins

Key risks:

High cow numbers in New Zealand
Weak USD
EU milk supply curve mirroring 2025

Hedging Recommendations

Q1 2026: Close out positions
Q2 2026: Continue to hedge
Q3 2026: Hedge in tranches, with emphasis on cheese
Q4 2026: Highly uncertain outlook – lean toward weaker prices

Strategic Outlook

" Milk volumes are expected to grow only modestly in 2026 and may decline in 2027. This is the ideal moment to secure your supplier base for the long term – ensuring reliable supply even as production tightens.

Whether you produce or process – we bring market insight, reliable partnerships, and Swiss quality expertise to help your business grow.

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