Newsletter

Dairy Markets: A Paradox? Newsletter – 2 March 2026

Fri, 02/27/2026 - 14:10

"Milk never forgives mistakes – it just takes its time to show them."

(from the notebook of Antoine, our Cheese Artist)

Review & Outlook

Across Europe, milk volumes are exceeding available processing capacities – spot milk is virtually unsaleable. At the same time, robust demand is absorbing high production volumes in finished products. This creates the paradox: rising prices for cheese, milk powder and butter – while spot milk disappears at distressed prices or never reaches conventional processing at all.

Milkfat & Butter

Butter remains the product with the greatest uncertainty: capacity constraints in cream processing are generating weekly price spikes that signal no fundamental direction. The risk is symmetric – upward as well as downward. For Q2/Q3 we refrain from a clear recommendation and are monitoring inventory developments.

Cheese

The European cheese market continues its recovery: Foiled Gouda (+8.7% MoM), Mozzarella (+10.7% MoM), Cheddar and even Emmentaler – which has finally broken its negative trend – are posting broad gains, supported by market tightness and robust export demand that is more than absorbing elevated production volumes.

Milk & Whey Powder

Powder markets showed a broad recovery in week 9: SMP Food climbed to €2,560/t (+13.9% MoM, turning positive YoY at +1.6–2.2%), WMP reached €3,285/t (+6% MoM), and whey powder delivered the strongest percentage gains across the powder category – SWP Feed up 25.1% YoY – as strong demand for WPC80 (€17,500–18,500/t) is limiting the availability of solids for SWP production.

Milk Deliveries – Week 7

Germany: +0.6% week-on-week, +5.8% above prior year level.
France: +5.6% year-on-year, equally expansive and above the long-term growth trend.

Milk Production – January 2026

The picture is globally consistent: milk is flowing abundantly – from Europe across North and South America to Oceania.

Europe

Netherlands: +6.0% YoY
Poland: +4.3% YoY
United Kingdom: +5.4% YoY
Ireland: –3.0% YoY
Austria: +9.9% YoY

Overseas

USA: +3.2% YoY
New Zealand: +2.0% YoY
Australia: +1.5% YoY
Argentina: +9.7% YoY

Trade Flows

The global trade flows reflect structural shifts that go beyond cyclical movements.

EU-27 Exports → USA (2025)

Butter: +13.4% to 70,062t
Cheese: –2.5% (Ireland +9.8%, France +2.1%, Germany +2.5%)
Casein: +31.1% to 19,349t
Caseinates: –37.3%

USA Export Records (2025)

Butter: +166.7% – a historic milestone; the USA closing its butter trade balance in surplus for the first time in over a decade
Cheese: +20.1%
SMP: –9.3%

UK – Intensified Trade

Cheese imports: +4.7%
Cheese exports: above 200,000t for the first time since 2019 (76.3% to the EU)
SMP exports: +60.8%
Whey powder exports: +20.8%

France – Net Butter Importer

Butter imports: +7.0%
Cheese exports: +1.7%
SMP imports: +17.6%
Butter and cream exports declining despite higher milk deliveries

🇨🇭 Switzerland

The Swiss dairy industry has a structural problem – and it has a name: years of opportunism at the expense of long-term strategy. Placing the blame on imports or international markets is convenient – and wrong. Strategy beats opportunism.

Emmi 2026

Switzerland's largest dairy processor achieved organic revenue growth of 4.3% in 2025 – ahead of its own expectations – and lifted its EBITDA margin to 10.4%, placing Emmi in the upper quartile of the global dairy industry. Growth is increasingly international: the Americas and Europe are driving momentum, while the Swiss division faces an organic decline of –2.0% to 0.0% in 2026 due to lower milk prices.

Forecasts

Q1 2026: Closed – positions should be rolled by end of March.

Q2 2026

Gouda / Cut Cheese: stable to slightly firmer
Mozzarella: stable to slightly firmer
Cagliata: stable to slightly firmer
SMP: stable to slightly firmer
Butter: symmetric risk – no recommendation
Whey proteins: stable to slightly firmer
WMP: stable to slightly firmer

Q3 2026

Gouda / Cut Cheese: stable to slightly firmer
Mozzarella: stable to slightly firmer
Cagliata: stable to slightly firmer
SMP: stable to slightly firmer
Butter: symmetric risk – no recommendation
Whey proteins: stable to slightly firmer
WMP: stable to slightly firmer

Q4 2026

Factors supporting higher prices:

Strong demand
Low inventories
Sustained demand for whey proteins

Risk factors:

Elevated cow numbers in New Zealand
Weak USD
EU milk curve mirroring 2025

Recommendations

Q1 2026: Positions closed
Q2 2026: Continue to hedge positions
Q3 2026: Hedge positions in tranches, particularly in cheese
Q4 2026: Highly uncertain outlook – proceed with caution

Strategic Outlook – "Strategy Beats Opportunism"

Milk volumes are expected to grow only moderately in 2026 and may decline in 2027. Now is the ideal moment to secure your supply base on a long-term basis – to ensure delivery capability when production tightens.

Whether producer or processor – we bring market intelligence, reliable partnerships and Swiss quality expertise to help your business grow.

Our Trade Fair Presence 2026