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Dairy Market Update: Are the buyers right? Newsletter: 20 June 2025

Thu, 06/19/2025 - 12:36

Dairy Market Analysis from 20-6-25; Milchmarkt Marktanalyse vom 20-6-25

Only the spot milk price increased (+3.9 %). Milk fat remained stable, while prices for all other products declined by 0.5–1.5 %. Casein once again saw the sharpest drop (–2.5 %).

Market Review & Outlook

Germany: Milk deliveries down (Week 23: –1.3 % vs previous week; –2.2 % vs previous year)
France: Below previous-year levels for the first time
Ongoing uncertainty due to delayed calvings linked to bluetongue virus

Once again, the market is being held up almost entirely by milk fat. Skimmed milk powder and casein remain under pressure.

Whey protein concentrates (WPC80/WPI): Prices remain high but highly volatile. Geopolitical uncertainties continue to drive fluctuations; moderate price corrections are likely.

Rabobank expects milk prices in the EU to remain stable and high throughout 2025 – despite declining production and geopolitical risks. Demand remains solid, but structural factors such as animal health, trade policy and environmental regulation cast a shadow over the second half of the year.

GDT Auction Results - 18 June 2025, Overall index: -1.0 % vs previous auction, second consecutive decline: Butter +1.4 %, Cheddar +5.1 %, Whole Milk Powder - 2.1 %, Skimmed Milk Powder -1.3 %, Anhydrous Milk Fat -1.3 %, Mozzarella -1.9 %,

Lactose -3.6 %.

USA: When Growth Eats Margin

Dairy Farmers of America (DFA), the world’s largest dairy co-operative, is investing billions into new cheese plants – particularly for Cheddar and Mozzarella.

What may appear to be progress at first glance turns out to be a structural problem with global consequences:

Global Cheddar prices have already dropped significantly – well below pre-crisis levels
Mozzarella may soon follow a similar trajectory

DFA is pursuing a classic displacement strategy: prioritising volume over value-added, no matter the cost. Without access to high-value markets such as the EU, the only option is the commodity trade – with all the downsides of aggressive price competition.

Lessons learned:

Growth is not a strategy
Scale is not differentiation
Processing is not marketing

Switzerland: Parallels with the USA?

In Switzerland too, many boards of directors have long failed to fulfil their core responsibility: to critically guide executive management and ensure strategic leadership.

Instead, the focus has often been solely on utilisation – regardless of market logic or value creation.

Let’s hope the warning signs from the USA are recognised and lead to the right conclusions.

The intensifying conflict between the nation’s largest cooperative and its leading dairy processor, ongoing since last autumn, highlights critical concerns. This appears to be a displacement battle devoid of a clear strategic direction, differentiation, or focus on value creation. Such dynamics are likely to exert downward pressure on producer prices, echoing the negative impact observed within the United States dairy market.

Are the buyers right?

There are valid reasons to wait – but not across all categories:

Milk fat is expected to remain tight in Q3
Mozzarella and semi-hard cheese currently show stable to slightly rising trends
SMP and casein: clear downward pressure
Whey proteins: 50/50 - no clear direction

Outlook for Q3 & Q4 2025

Q3 2025

Gouda: Price increases possible – secure 30–50 % now
Mozzarella: If you plan to deliver in August, you should act now. US competition is not yet affecting the European market, but DFA export pressure may become more visible by year-end
Cagliata: Secure volumes for Q3 – seasonal demand remains strong through September, while milk availability remains low
Milk fat: Strong demand with falling availability
SMP: Neutral – stable supply, slight downward price trend
Whey proteins: Volatile sideways movement – no clear trend