Newsletter

Dairy Market: A Shift in Momentum? Newsletter – 16 February 2026

Thu, 02/12/2026 - 19:35

Review & Outlook

The seasonal milk peak has still not been reached, and growth remains subdued. Early forecasts suggest a flat peak and a potential decline in EU milk production in 2026. However, the risk remains that volumes could rise again in Q4, as seen in previous years.

We maintain last week’s recommendation of partial hedging for Q2 and advise securing a base volume for Q3 as well. While it is still early, the probability of significantly lower prices is much smaller than the likelihood of a sudden upswing—particularly as EU cheese stocks remain low.

If the spot milk price does not move toward the contract levels of €0.38, the market will remain volatile and can turn quickly.

Market Developments

Powders

Powder markets showed a mixed picture in Week 7: Food‑grade SMP corrected after a brief overheating, while feed‑grade SMP, WMP and especially whey products continued their upward trend. This was primarily driven by strong international demand and tight whey availability due to elevated WPC production.

Cheese

The cheese market continued to gain momentum in Week 7, led by notable increases in Gouda and Mozzarella amid tight availability. Cheddar recorded moderate gains. Emmental, however, declined further and reached a new low, pressured by past overproduction triggered by its earlier price advantage over Gouda. Cagliata shows slight weakness, though we cannot confirm this trend from our side.

Butter

The butter market remained highly volatile in Week 7. Although prices held above €4,000 per tonne and sentiment improved, high EU stocks and ample milk supply are preventing any stronger upward movement.

Milk Deliveries

Germany: +0.2% week‑on‑week; +6.1% year‑on‑year.
France: +0.7% week‑on‑week; +5.9% year‑on‑year.

Developments in 2025

Ireland

Milk collections increased sharply in 2025 (+5.4%) to a record 9.10 million tonnes. Production grew in drinking milk (+1.4%), butter (+7.0%) and SMP (+21.5%).

United States

Milk production rose by 2.8% in 2025. Cheese (+2.9%), butter (+5.7%) and yoghurt (+7.6%) reached record levels, while SMP production fell for the fourth consecutive year (–5.5%). End‑of‑year dairy inventories remained broadly unchanged from 2024.

Switzerland 🇨🇭

Milk volumes in Switzerland remain high, and with structural issues still unresolved, market conditions remain difficult to read. This leads to low value creation and increasing political reactions from producers.

Forecasts

Q1 2026

Gouda / Semi-hard cheese: stable to slightly firmer
Mozzarella: stable to slightly firmer
Cagliata: stable to slightly firmer
SMP: firm to moderately weaker
Butter: stable to slightly weaker
WPC80: firm, partly rising
WMP: stable to slightly firmer

Q2 2026

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

Recommendations

Q1 2026: Finalise positions.
Q2 2026: Hedge part of the volumes carful for Butter and SMP
Q3 2026: Hedge cautiously, especially in cheese.

Strategic Outlook – “Secure now, benefit later.”

Milk volumes are growing only moderately. This is an ideal moment to secure long‑term supplier relationships for 2027–2028 to ensure availability in a tighter production environment. The most attractive partner today may no longer be in the market tomorrow.

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