Dairy Market Update: Fragile? Newsletter – October 20, 2025
The decline has slowed slightly.
Review and Analysis
Last week we spoke of a possible breather — it hasn’t arrived yet, but the downturn is slowing. There are two main reasons for this:
- Europe has regained competitiveness in international trade.
- Imports of U.S. butter have become less attractive because
- both markets are declining simultaneously,
- long shipping times add risk,
- and current shortages in Europe have eased.
Nevertheless, milk volumes remain above last year in almost all EU countries, while demand stagnates.
In many cases, farmgate milk prices are still well above commodity returns, putting pressure on processors.
Milk intake (August 2025)
- Germany: 21.68 million tons (–1.4% YTD, +2.1% in August – highest August in 15 years)
- France: +4.0% in August, +0.5% YTD
- Denmark: +1.6% in August
- Switzerland: 2.28 million tons (+1.0% / +22,102 tons)
Demand and Market Situation
- Raw milk supply: above seasonal norms across Europe
- Skim concentrate & industrial cream: abundant, weak prices
- Fresh dairy segment: seasonally normal, no growth impulses
- Cheese market: pressure easing slightly; inventories “normal to young”
- SMP: export activity improving, supported by a weak euro and an early Ramadan 2026
- WMP: quiet demand, well supplied market
- Whey powder: stable with steady feed demand
Germany
- Conventional milk price: €0.5351/kg (year-high, +1 ct since February)
- IFE raw material value (Butter + SMP): €0.445/kg → down 10 ct vs. Dec 2024
→ Clear negative margin between farmgate and processing returns.
🇨🇭 Switzerland (Source: TSM Treuhand)
Jan–Aug 2025 vs. 2024
- Milk production: +22,102 t (+1.0%)
- Butter production: –900 t (–2.9%)
- SMP: –2,481 t (–13.3%)
- Cheese production: +24,664 t (+2.5%)
- Cheese exports: +1,043 t (+2.2%)
The market framework based on butter and milk powder has effectively failed.
Despite ongoing subsidies for powder production, more milk is being processed into cheese, particularly industrial cheese, largely driven by the largest cooperative.
Exports are growing too slowly, and inventories are building up – especially for Gruyère, Emmental, Raclette, and industrial cheese.
This has created price pressure, particularly in the industrial segment. The largest cooperative, Mooh, has already announced a milk price cut of nearly 7% from November.
Cheese segment details
Hard cheese: Production +0.6%, Export –3.6%
- Gruyère AOP +5.7%, –11.6% export
- Emmentaler AOP +4.1%, –1.0% export
Semi-hard cheese: Production +3.7%, Export +3.5%
- Raclette –1.4% / –21.8% export
- Appenzeller –3.6% / –0.8% export
- Industrial cheese +27.9% / +20.6% export
Soft/Fresh cheese: Production +9.9%, Export +18.3%
- Mozzarella +2.0% / +17.6% export
- Quark & other fresh cheeses +22.4% / +16.6% export
Fragile?
Europe appears to be stabilizing – but on a fragile foundation.
Lower prices and the declining appeal of U.S. imports have improved the EU’s export position, but relief remains limited.
As seasonal demand slows from late November onward, the market is likely to come under renewed pressure.
In previous years, stabilization typically occurred in March, when New Zealand’s milk season ends.
In 2026, however, inventory pressure may be too high for a comparable recovery.
Q4 2025 – Trends & Risks
- Gouda: sideways
- Mozzarella: sideways
- Cagliata: downward pressure
- Butterfat: sideways
- SMP: negative trend
- Whey products: stable
October/November are likely to move sideways at a low level with a negative bias.
A year-end clearance effect appears likely from November onward.
Q1 2026 – Correction Phase Likely
- Seasonal milk volume increases → higher supply pressure
- Export performance depends on U.S. and NZ price levels
- Butter and mozzarella particularly vulnerable to further corrections
- Whey proteins: typically softer after December/January demand peaks
Outlook: Q1 2026 likely to be weaker than Q4; a longer market adjustment phase may last into Q3 2026.
Recommendations
- Prefer short-term monthly contracts – risk in Q4/Q1 remains high
- Tie long-term contracts to index-based pricing wherever possible
Meet Us at Upcoming Trade Shows 2025/26
- World Cheese Awards, Bern: Nov 13–15 2025
- Winter Fancy Food, San Diego: Jan 11–13 2026
- Marca, Bologna: Jan 15–16 2026
- Tutto Food, Milan: May 11–14 2026
- Salon du Fromage, Paris: Jun 7–9 2026
- Mondial du Fromage, Tours: September 2026
- SIAL, Paris: Oct 17–21 2026
- Anuga, Cologne: Sept 9–13 2027
In Closing: Treat yourself to a genuine Swiss Flower Meadow Cheese made from raw milk – not only a delight for the palate, but a small moment of joy for the soul.
Kind regards, Affineur Walo
