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Dairy Market Update: Is the turning point near? Newsletter – 16 May 2025

Thu, 05/15/2025 - 14:51

Dairy Market Analysis from 16-5-25; Milchmarkt Marktanalyse vom 16-5-25

Last week, prices showed a positive trend for the first time in a while – despite seasonal production peaks. What’s particularly striking: EU cheese demand is growing faster than many had anticipated. At the same time, milk fat is becoming increasingly scarce.

Market Trends: Review and Outlook

The seasonal peak in milk deliveries is close, and prices have remained stable – despite export challenges driven by a weak dollar and low US cheese prices. Meanwhile, cheese production in Europe has increased.

Still, no price wars have broken out, thanks to the strong domestic demand. Retail cheese sales in Germany rose by +16.9% year-on-year; similar trends have been reported in France and the Netherlands.

Europe is increasingly shifting from milk powder to cheese production – with the side effect of reduced fat availability and rising milk fat prices.

Cheese market: remains balanced. Despite seasonal highs in production, no price drops have been observed. Q3 volumes are already being actively requested – a sign of stable to slightly rising price levels.
Milk fat: remains expensive and scarce.
SMP: well supplied and price-stable. Currently not a market-moving factor.

Report from Tutto Food, Milan (5–8 May 2025)

The fair was large and well attended. Cheese demand met stable price levels. Initial contracts for Q3 were signed – another sign of stable to firming tendencies.

However, there’s a growing offering of food preparations made with vegetable fats, mostly palm oil based. These products are priced at around €1.40/kg – roughly 30% cheaper than cow’s milk cheese.

One increasingly common product is "Analog-Cagliata", which is later processed into pizza cheese. Labelling is designed to mimic cheese as closely as possible. Two typical examples:

Mozzarella Mix

60% Fiore di Latte Mozzarella, 40% milk-based product with vegetable fats

Ingredients: Cagliata (MILK, salt, microbial rennet, lactic cultures) 60%, Analog-Cagliata (MILK, vegetable fat, salt, microbial rennet, lactic cultures, acidity regulator: lactic acid) 40%

Pizza Mix

Milk-based product with vegetable fats

Ingredients: MILK, vegetable fat, salt, microbial rennet, lactic cultures, acidity regulator: lactic acid

If your next pizza in Italy tastes like candle wax – now you know why.

Market Situation in Switzerland

The situation in Switzerland is less balanced. High milk production coincides with weak global economic momentum and unfavourable exchange rates (EUR/USD). The result: very inconsistent price and quality developments for Swiss cheese.

Is the turning point approaching?

Recent price movements may indicate a turning point. Not all products are following the same pattern – especially for mozzarella, where future developments in the vegetable fat-based "mozzarella blend" segment will be decisive.

Our outlook for Q2 and Q3 assumes that this segment will not expand further. Perhaps some will recall the Codex Alimentarius – and its definition of "cheese", or at least what consumers expect it to mean.

Outlook for Q2 and Q3 2025

Q2 2025

Gouda: Stock up now – stable prices with slight upward pressure
Mozzarella: Take advantage of low offers – broad price range allows opportunistic buying
Cagliata: Technically tight market – especially for specified qualities. Delaying orders risks reduced availability later
Milk fat: Price fixing recommended – summer demand meets structural scarcity
SMP: Flexible buying strategy possible – neutral pricing, market well supplied

We remain optimistic: stable to slightly rising prices, supported by solid demand – especially for milk fat.

Q3 2025

Gouda: Prices may rise – secure supply early if you have firm demand
Mozzarella: If you're planning for August, act now – bargain lots are rare, and the premium segment remains firm
Cagliata: Potential supply shortages → secure volume contracts early
Milk fat: Still in demand – supply is tightening (low SMP prices are discouraging fat production)
SMP: Neutral outlook – stable supply, little price pressure