Dairy Market Update: Butter Meltdown? Newsletter of 9 December 2025
Review and analysis
First of all, we wish everyone a Merry Christmas and a good start into the New Year – the next newsletter will probably appear on 12 January 2026.
2025 is coming to an end – a brief review
In principle, 2025 developed as expected: a strong first half of the year with firm prices, followed by an abrupt shift into a bear market and the beginning of a structural crisis. Our warnings about weak cooperatives and the looming consolidation have unfortunately been confirmed.
Where we were mainly wrong was the length of the high-price phase: in early summer we – like many others – were still expecting further price increases in Q3 and recommended partial hedging of 30–50%. In hindsight, these volumes were too expensive. Since the end of July we clearly identified the trend reversal and warned against further long-term commitments. Those who followed our recommendations had planning security in the first half of the year, paid a premium for part of their Q3 volumes and avoided bigger mistakes from late summer onwards.
Outlook 2026
For 2026 we expect sufficient milk supplies with subdued demand, continued aggressive US exports and markets that are more likely to move downwards or sideways. Portfolio clean-ups will force some players to switch suppliers; at the same time, low farm-gate prices will drive more farmers out of production. In the following years this is likely to lead to milk shortages again and a new wave of structural change.
Implications for practice
- Avoid suppliers whose structure is fragile (high debt, political influence, weak results, frequent management changes).
- Select suppliers based on the stability of their milk base, technical competence and strategic transparency.
Milk supply week 47
- Germany: Week 47 flat vs. previous week, +7.4% year-on-year – still a very high level.
- France: Week 47 +5.2% vs. the same week last year.
- UK: October +7.0% vs. previous year, Jan–Oct +5.2%.
- Canada: September +3.9% vs. previous year, Jan–Sep +2.2%.
- Poland, Ireland, Austria, etc.: also clear increases (typically +3–4% over the year).
- USA: Milk production Jan–Sep +3.7%, calendar-adjusted +2.4%.
- New Zealand & India: Production continues to grow; India +3.7% in the last fiscal year, New Zealand around +2%.
In short: almost all major export regions are clearly above last year – the oversupply is confirmed.
Milk price developments
Since summer 2025, farm-gate prices have fallen by 20% and more.
Netherlands – basic prices December 2025 (€/100 kg)
- FrieslandCampina NL: 43.50 €/100 kg (-5.4%)
- A-ware NL: 42.41 €/100 kg (-4.4%)
Belgium – basic prices December 2025
- FrieslandCampina BE: 41.40 €/100 l (-5.5%)
- Milcobel BE: 39.36 €/100 l (-13.5%)
- A-ware BE & Southwest NL: 40.68 €/100 kg (-7.0%)
GDT of 3 Dec 2025
The GDT overall index fell again, this time by –4.3% across all products and delivery periods – the 7th negative auction in a row and the sharpest decline since early September.
- Butter: biggest drop, on average –12.4%.
- AMF: clearly weaker at –9.8%.
- WMP: already the 7th decline in a row, this time –2.4%.
- SMP: on average –1.6%.
- Mozzarella: slightly weaker at –1.0%.
- Buttermilk powder: slightly firmer, +1.8%.
- Lactose: clearly positive, +4.2%.
- Cheddar: strongest winner, prices +7.2% compared with the previous auction.
Developments in the powder and protein market
- In the EU, value creation is shifting away from classic powders (SMP, standard whey) towards highly concentrated milk and whey proteins (MPC85/MPI, WPC80/WPI).
- SMP and basic whey products are largely pure commodities with strong price pressure; momentum and margins lie in functional high-protein ingredients for sports nutrition, medical nutrition, senior and diet products.
What does this mean for Switzerland?
High-value protein lines require large, continuous volumes, low costs and a lot of capital – exactly where Switzerland has structural disadvantages. The country’s strength remains cheese, raw milk, origin and brands; powders/proteins will remain mainly a tool to valorise surpluses, not the field where Swiss processors can lead on international price.
Butter meltdown?
Butter prices have melted this autumn like snow in spring – more than 60% loss in twelve months, right in the middle of the Christmas demand period. The real stress test is likely to come only in the first quarter of 2026.
Q1 / 2026
- Gouda (semi-hard cheese):
Market: rather sideways with downside risk.
Recommendation: fix at most 50% of January needs; purchase the rest of Q1 in tranches after the first January quotations (from around 15 January). - Mozzarella (block):
Market: tends to weaken, with additional pressure from very cheap imports.
Recommendation: hedge at most 30% for January, cover the remainder after 15 January depending on spot levels. - Cagliata:
Market: producers using Cagliata are currently clearly disadvantaged versus finished mozzarella; overhangs likely.
Recommendation: wait for “Christmas milk” offers, then secure January volumes up to mid-February at most; reassess further Q1 volumes after 15 January. - SMP:
Market: relatively stable, with potential for “Christmas milk discounts”.
Recommendation: cover about 50% of January; leave February/March open for now and react opportunistically to lower offers. - Butter:
Market: clear price pressure, stocks full.
Recommendation: wait, avoid long commitments; prefer short contracts or spot. - Whey proteins (especially WPC80):
Market: still highly priced, seasonally tends to soften in January.
Recommendation: also wait and, if necessary, phase in purchases only over the course of January. - WMP:
Market: weak, closely linked to milk fat.
Recommendation: cover only short-term needs; otherwise watch January developments.
Q2 / 2026 – preliminary view
For Q2 the visibility is still too poor to hedge aggressively as long as
- milk volumes remain high,
- the milk price indicators are clearly below farm-gate prices, and
- there is no real relief on the fat side.
Do not commit to larger Q2 volumes before at least 15 January. Afterwards, depending on the product, buy at most 20–30% of Q2 needs in initial tranches and keep the rest flexible.
Recommendation
Review your supplier portfolio, define your strategic partners and close existing gaps. Keep in mind: in 12–18 months there could again be too little milk – and then you will need reliable suppliers. Those relationships have to be built now.
We are there for you – our trade fair presence 2025/26
- Winter Fancy Food, San Diego – 11–13 January 2025 (uncertain)
- Marca, Bologna – 14–15 January 2026
- Tutto Food, Milan – 11–14 May 2026
- Salon du Fromage, Paris – 7–9 June 2026
- Summer Fancy Food – 28–30 June 2026
- Sial, Paris – 17–21 October 2026
Treat yourself to a genuine Swiss Blumenwiesenkäse made from raw milk – not only a pleasure, but also a small piece of joy for the soul.
Best regards, Affineur Walo
