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Dairy market: Peak? Newsletter – 23 March 2026

Fri, 03/20/2026 - 19:24

When the shepherds say in August that the summer was good – the finest cheese is already in the cellar. Those who wait longer, wait too long. (From the notebook of our Antoine, the cheese artist.)

Review & outlook
While the situation in the Middle East remains uncertain, the dairy market is broadly moving along the expected path. Milk deliveries in Europe continue to exceed processing capacity and yet product prices are still rising. Milk fat has probably reached a short‑term peak; SMP has gained strong upward momentum, but volatility is increasing. Block cheese remains very firm, although the pace of gains is slowing.

We stick to our strategy: at current levels, prices are high for hedging Q3 2026. We recommend adding Q3 cover only on price dips and in tranches.

Milk supply

Germany, week 12: +6.7% year‑on‑year, +1.0% versus the previous week.
France: latest weekly deliveries around +5.5% versus last year.
EU‑27, January 2026: +4.7% year‑on‑year, with Germany and France above average. Biggest increase: Belgium +10.9%. Declines mainly in the Baltics and Romania.
Italy 2025: new record, average daily deliveries +1.8% versus 2024. Strongest monthly increase in December: +6.0%.

Spot milk
Spot prices for liquid milk in Northwest Europe are edging higher, but even after the move the north‑German raw milk price at EUR 15.50/100 kg remains historically low for this time of year, as strong milk inflows on the way to the seasonal peak continue to weigh on the market.

Powder markets
Prices have moved sharply higher across all milk powders. The strongest move is in SMP; one possible driver is that Iran – the number‑four exporter – is struggling to get product out. Buyers have covered short‑term needs out of concern for war‑related supply risks, but with part of that demand now covered, market participants report wide price ranges and growing volatility, especially in SMP. For WPC80 and WPI, demand is outpacing production capacity and prices remain consistently high; this could start to put structural pressure on cheese prices over the medium term.

Milk fat
After two months of price increases, milk fat has corrected sharply. This has effectively wiped out most of the gains seen in recent weeks. High butter inventories and continued strong milk supply are the main triggers, while the latest GDT auction failed to provide fresh support.

Cheese
Cheese prices remain constructive, albeit with more moderate week‑on‑week gains. Robust demand continues to underpin the market, but many buyers are now short‑term covered and are waiting for setbacks – together with high regional cheese production this could cap further upside in spot prices.

Global Dairy Trade (GDT) result – 17 March 2026
GDT index +0.1% – effectively flat. WMP was weak, while SMP and AMF surprised on the upside. Butter was mixed, with European product setting the softer tone. (WMP −4.0%, SMP +5.2%, Cheddar +0.1%, Mozzarella +0.5%, Butter −0.9%, AMF +6.4%.)

Proteins are likely to remain firm into the summer, while fat stays high‑valued – both argue against a scenario of sharply lower cheese prices.

🇨🇭 Switzerland
Swiss cheese exports increased in the first two months of the year, driven mainly by industrial cheeses. Exports to the US, however, continue to trend lower.

Exports Jan/Feb 2026

Fresh cheese 2026: 2,646.8 t (2025: 2,113.2 t) → +533.5 t / +25.2%.
Appenzeller®: 658.7 t (626.4 t) → +32.3 t / +5.2%.
Tête de Moine AOP: 224.0 t (232.6 t) → −8.6 t / −3.7%.
Raclette: 219.7 t (191.7 t) → +28.0 t / +14.6%.
Other semi‑hard cheese < 45% fat i.t.: 1,913.9 t (956.4 t) → +957.6 t / +100.1%.
Total semi‑hard cheese: 4,444.7 t (3,449.4 t) → +995.3 t / +28.9%.
Emmentaler AOP: 1,105.3 t (1,321.9 t) → −216.6 t / −16.4%.
Gruyère AOP: 2,076.7 t (2,008.4 t) → +68.3 t / +3.4%.
Other hard cheese < 45% fat i.t.: 866.0 t (1,040.1 t) → −174.1 t / −16.7%.
Total hard cheese: 5,115.2 t (5,507.1 t) → −391.9 t / −7.1%.
Total cheese 2026: 13,474.8 t (2025: 12,294.1 t) +1,180.6 t +9.6%.

Outlook

Q1 2026
Recommendation completed – positions should be rolled by the end of March.

Q2 2026

Gouda / continental cheese: slightly firmer.
Mozzarella: slightly firmer.
Cagliata: slightly firmer.
SMP: slightly firmer, direction uncertain.
Butter: volatile – currently softer, but broadly stable further out.
Whey proteins: slightly firmer (WPC80 and WPI in very strong demand).
WMP: slightly firmer.

Q3 2026 (broadly stable, in line with previous years)

Gouda / continental cheese: stable.

Mozzarella: stable.

Cagliata: stable.
SMP: slightly firmer.
Butter: remains volatile, but with an overall stable bias.
Whey proteins: slightly firmer (WPC80 and WPI in very strong demand).
WMP: slightly firmer.

Q4 2026

Upside factors:

Solid demand.
Low inventories.
Strong demand for whey proteins.

Risks:

High cow numbers in New Zealand.
Weaker USD.
EU milk curve potentially similar to 2025.
In recent years prices have usually softened from October onwards.

Recommendation

Q2 2026: It is very likely too late to find attractive levels for additional hedging.
Q3 2026: At current levels, forward cover is not appealing. The only exception: if we see a clear dip, buyers should add coverage selectively and in tranches.
Q4 2026: Clear non‑recommendation for hedging – first watch how Q3 develops. Downside risk is seen as larger than the remaining upside potential. Anyone still wanting to reduce Q4 risk should limit themselves to small volumes via options or staggered structures.

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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