MILK MARKET UPDATE: Heat-Induced Pause? Newsletter No. 167 | 6 July 2026
He who pounds the table is only negotiating with himself. Milk and rennet must come to terms, or nothing will set at all. (Antoine the Cheese Artist; Gruyères, ca. 1680)
Review & Outlook
The heatwave in weeks 25/26 markedly reduced milk deliveries and component values across Europe. As a result, spot milk is now trading close to the contract milk price, and most market prices have gained ground. At the same time, however, the heat is also weighing on consumption, particularly for butter.
The heatwave has stabilised the European market in the short term. What matters over the coming weeks is whether the weather-driven production losses outweigh the simultaneously weaker summer demand. This will determine whether the current recovery holds or proves to be no more than a brief weather rally.
Internationally, the underlying tone remains rather negative. Supply pressure continues to come primarily from Oceania and the US. However, the Oceania milk peak is not due until October — the market picture may still shift considerably before then.
Milk deliveries (week 24)
- Germany: −1.0% vs. prior week, +7.1% year-on-year
- France: −1.3% vs. prior week, +1.3% year-on-year
With the heat, milk volumes declined at a similar pace to last year, and the year-to-date lead remains substantial. Considerably lower deliveries at falling component levels are reported for weeks 25 and 26.
Kiel raw material value (June 2026)
35.7 ct/kg; −4.8% month-on-month. Butter +1.3%; skimmed milk powder −7.2%. Year-on-year −28.3%.
Milk volumes May 2026 — International
- UK: 1.5 million t; −0.2% year-on-year. First reading below prior year since August 2024. Jan–May: 7.0 million t; +2.0%.
- Australia: 673,620 t; +5.4% year-on-year. Jan–May: 3.27 million t; +2.9%.
FAO estimate for 2026 world milk production:
+1.0% to 1.013 billion t. Europe: slight decline. US: expansion. World trade +0.9%, with the strongest growth in cheese.
GDT Pulse of 30 June 2026: a clearly weaker picture
Pulse Event 111 came in weaker than both the previous GDT and Pulse events; milk fat and New Zealand skimmed milk powder fell the most. NZ SMP −5.58%, AMF regular −2.40% (premium −2.45%), Arla SMP −2.69%, WMP regular −0.43%, instant WMP and unsalted butter unchanged.
German cheese exports and imports (January–April 2026)
Exports rose 6.8% to 504,720 t (Switzerland: 27,206 t). Italy remains the most important sales market at 83,726 t (+6.6%). Exports to the United Kingdom increased 6.8% to 16,875 t. Third-country exports developed dynamically, up 20.4% to 74,362 t. Cheese imports remained nearly stable at 332,099 t, +0.3% year-on-year (Switzerland 27,369 t). Imports from third countries rose 4.3% to 18,862 t.
Cheese
- Flower-meadow cheese (raw milk / premium): prices stable to slightly rising, on solid demand.
- Pasteurised standard cheese: standard cheeses have recently stabilised. Gouda and mozzarella recovered slightly but remain well below year-earlier levels on a monthly basis. Inventories remain comfortable.
- Volume / Decanter cheese: remains clearly under pressure, notably due to aggressive offers from Switzerland. Hi-Lo cheese (high protein / low fat): the segment continues to grow. Prices largely stable; selective increases possible for July/August.
Milk powder
SMP: powder markets edged up in week 27, partly because Onil has announced an SMP tender. WPC80 / WPI90: week 27 was an overall quiet market for high-protein whey products. WPC80 remains tight and expensive, but the price surge has lost momentum, and the symbolic €30,000/t mark is moving out of view for now. WPI90 remains an illiquid niche product with predominantly contract-bound production and limited spot availability, still trading at a marked premium to WPC80.
Liquid markets
The heat is curbing production, supply is tightening, and spot milk is trading almost at the price of contract milk. Southern German raw milk is rising to €37.50/100 kg on the back of Italian buyers, Dutch milk to €34.00; northern Germany sits in between at €35.50. Spot markets are currently highly sensitive to any change in weather. A further heatwave alone could sharply reduce availability again in the short term.
Milk fat
In week 27, butter rose slightly again (€3,790, +€190). Declining milk volumes and lively fresh demand are driving cream (€4,185/t, +€375). The fat market remains split. While fresh cream is in strong demand owing to tighter milk availability, high butter stocks continue to weigh on the butter market. In the short term, fat is benefiting from the weather, but structurally the market situation remains challenging.
Switzerland
Switzerland is preparing for another period of high production in Q4 2026 and Q1 2027. Average producer milk prices are likely to remain under pressure over the next twelve months. However, this pressure will not affect all market participants equally. While some suppliers can still place their volumes well, others are already struggling today with declining sales. To avoid larger imbalances, the industry will need a constructive dialogue. Pressure and threats rarely lead to solutions, but often to negotiation deadlock.
Recommendations
For Q3/Q4 we currently recommend a clearly wait-and-see stance; selective hedging can be used opportunistically.
Q2 2026 should be covered.
Q3 2026 — seasonally quiet
- Flower-meadow cheese: rising into autumn
- Gouda / semi-hard cheese: still weak
- Mozzarella: still weak
- Cagliata: still weak
- Hi-Lo: rising
- SMP: high stocks, rather weak
- Butter: high stocks, weak
- Whey proteins: moderately rising
- WMP: stable to slightly weaker
Q4 2026: current forecast points to falling prices
After the summer tightening in Europe, the focus turns to Oceania. The upcoming milk peak in New Zealand is likely to shape international markets more strongly than European supply developments.
Price drivers
- Flower-meadow cheese season
- Stable demand
- Low stocks
- Strong demand for whey proteins
Risks
- High cow numbers in New Zealand
- Possible USD weakness
- EU milk curve similar to 2025
- Seasonal weakness from October
- Geopolitical risk in the Strait of Hormuz → oil/gas prices → energy-intensive milk processing (powder, whey refining) becomes more expensive
- Structural change → large dairies with microfiltration hold an advantage in whey refining → small cheese dairies under pressure
- High butter and SMP stocks
Strategic Outlook — Strategy beats Opportunism
Milk volume growth in Europe is slowing in 2026; a trend reversal from 2027 cannot be ruled out. Those who act opportunistically today will lack supply capacity tomorrow.
A stable supplier base is not an option but a necessity — those who secure the right partners now will be able to deliver in 2027, when others are searching.
We are on site for you – our trade fair presence 2026
- Summer Fancy Food: 28–30 June 2026
- SIAL, Paris: 17–21 October 2026
- Marca, Bologna: 13–14 January 2027
- Cibus, Parma: 4–6 May 2027
- Mondial, Tours: 12–14 September 2027
Treat yourself to a genuine Swiss raw-milk Flower Meadow cheese – not just a pleasure, but a little piece of joie de vivre for the soul.
Warm regards, Affineur Walo
This forecast is based on our market experience and does not constitute a definitive prediction. We accept no liability for its accuracy or for any future deviations.
