Newsletter

MILK MARKET UPDATE: Price Tsunami? Newsletter No. 170 | 27 July 2026

Fri, 07/24/2026 - 14:17

Dairy Market Analysis from 27-7-26; Milchmarkt Marktanalyse vom 27-7-26

"The wise cheesemaker fills his cellar while the sun shines — not when the snow falls" Antoine the cheese artist, Gruyères, around 1680, a character of historical fiction who accompanies us in every good cheese cellar.

Review & Outlook

This is my last newsletter before the summer break. The next issue is planned for 24 August 2026.

The heat continues to support the market — only spot milk is reacting to the recent recovery in deliveries. Even as the heat eases, it remains dry; feed is scarce and expensive. At the same time, beef prices are high and milk prices low — what could be more natural than sending a few cows to slaughter early? We will see how these markets develop.

Q4 will be decided in Oceania. New Zealand’s production data does not yet point to a shortage. From October, the market hinges on the course of the new season and possible El Niño effects. If European and South American production decline at the same time, prices could rise rapidly.

Price movements confirm the picture of recent weeks: the bottom in standard cheese appears to have been reached for now. Trading volumes are low due to the holiday season — a two-week upward move is not yet a guaranteed trend reversal.

Recommendations

Q3: cover. The move is measurable: Edam +7.8% over four weeks, Cagliata +4.6% in one week, spot milk +61% over four weeks. The heat is partly priced in — but the move is underway, not the other way round.
Q4: neutral to slightly bullish — cover product by product. Cover cheese: Cagliata, semi-hard cheese, Mozzarella. SMP: partial cover. WMP: wait. Butter: not via EEX — if covering fat, then via Oceania/GDT, where the curve is flat.
Q1 2027: slightly bullish, focus on Oceania. If the NZ peak in October falls into the El Niño window, the move comes at year-end. First tranche now, add with the NZ data.

Exceptions: Butter — stocks are still buffering; we read butter through inventories, not the forward curve. SMP looks well supported, above all by expected demand from the East.

Milk deliveries (week 28)

Germany: +3.7% week-on-week, +4.0% year-on-year
France: +2.2% week-on-week, −1.0% year-on-year

Fat and protein contents continue to fall. The warm weather persisted into week 29; further declines or stabilisation at a low level are to be expected. Temperatures are partly too high for grazing. The cows are eating the winter stocks in the barn, while heat and drought leave little regrowth on the pastures.

Milk collection May 2026 – EU-27

May 2026: estimated +2.4% above prior year — growth is slowing. January–May: +3.8%. The seasonal peak came as early as April this year. Main reason for the slowdown: France fell below the prior-year line in May for the first time since the start of the year.

EU-27 sales (exports January–May)

Skimmed milk powder: +11% to 367,700 t; Algeria remains the largest market (12%). Cheese: +4%, with gains led by Japan, the UK and Bosnia-Herzegovina. Butter: +36% on improved competitiveness.

GDT auction of 21 July 2026 — index +1.5%

Volume traded: 26,889 t, +2.2% vs the previous event
Skimmed milk powder: +2.8% to USD 3,234/t
Whole milk powder: +1.6% to USD 3,486/t
Buttermilk powder: +10.5% (strongest gain)
Mozzarella: +1.3%
Butter oil (AMF): +1.1%
Butter: −0.6%
Cheddar: −6.5%

Futures had signalled −4%. The market is currently ignoring the bearish SGX signals and the high NZ milk production. The powder markets in particular are showing unexpected strength, while butter and Cheddar remain the only real weak spots.

Cheese

Flower Meadow cheeses (raw milk/premium): Emmental slightly up, the other varieties stable.
Standardised cheeses (pasteurised): Foiled cheese is leading the recovery: Gouda +1.9% to €3,285/t, Edam +1.2% — Mozzarella is flat at €3,480/t, correcting its relative overpricing. Trading remains quiet over the holidays; July and August are largely covered.
Volume/decanter cheeses: No quotation. Still aggressive offers out of Switzerland.
Hi-Lo (high protein/low fat): Grana Padano slightly up; buyers are increasingly looking for substitutes such as Gran Pasta.

Milk powders

SMP: Firm despite the holiday lull: +1.1% to €2,740/t; lactose the star at +26% year-on-year — only WMP eased (−1.9%). The market is pricing in heat-reduced milk supply and Middle East restocking from September.
WPC80/WPI90: WPC80 eased for the fifth week in a row to €25,500/t (−0.6%) but remains 32% above end-March; WPI90 fell to €30,625/t (−1.2%). Supply remains tight and largely committed — participants expect firmer prices from September.

Liquid markets

Spot milk Germany North €0.355/kg, −4.1% week-on-week — the recovery in deliveries has eased the raw material market. Over four weeks, spot milk remains up 61%.

Milk fat

Kempten raised block butter to €3.95–4.05/kg on 22 July — lively buying interest, above all from traders. Pure milk fat −5.7% to €3.97/kg.

Switzerland

Switzerland does not know where it wants to go. The traditional AOP varieties are under pressure, while the new Hi-Lo products and other cheeses are growing strongly. At the same time, processing capacity is lacking, and some cooperatives must balance their books by year-end. This keeps the pressure on the milk price — and the internal rivalry it creates prevents the current opportunities for better value creation from being captured.

Price trends by quarter

Coverage recommendation: Q3 — cover fully through September at today’s low prices; cover October. Nov./Dec.: partial cover. Q1 2027: partial cover. Exception: butter neutral.

Q3 2026 – rising

Flower Meadow cheeses: rising into autumn
Gouda/semi-hard cheese: rising
Mozzarella: rising
Cagliata: rising
Hi-Lo: rising
SMP: moderately rising
Butter: high stocks, rather neutral
WPC80/WPI: rising
WMP: sideways

Q4 2026 – neutral to slightly bullish

Flower Meadow cheeses: rising
Gouda/semi-hard cheese: rising
Mozzarella: rising
Cagliata: rising
Hi-Lo: rising
SMP: moderately rising, producers largely committed
Butter: high stocks, EEX unattractive
WPC80/WPI: rising
WMP: depends on the NZ peak

Q1 2027 – still uncertain, hinges on El Niño (focus Oceania)

Flower Meadow cheeses: rising
Gouda/semi-hard cheese: rising
Mozzarella: rising
Cagliata: rising
Hi-Lo: rising
SMP: rising, once stocks are drawn down
Butter: rising, once the inventory buffer tips
Whey proteins: rising
WMP: rising

Reasons and assumptions for rising prices

Low farm-gate milk prices in the EU.
Higher costs for energy and fertiliser.
Hot, dry weather forecasts for Central Europe.
High beef prices despite the summer dip.
Falling farm-gate milk prices in New Zealand.
Hot, dry weather forecasts for New Zealand (El Niño).
El Niño heavy rains in South America (Nov./Dec.).
The US cannot offset declines in other regions; the strong USD is holding back exports.
Demand assumption: Middle East restocking from September; China at least stable.

Nine factors, one direction. If they all materialise, we will not see a price increase — we will see a price tsunami.

Strategic outlook – strategy beats opportunism

European milk supply growth is slowing in 2026; a trend reversal from 2027 cannot be ruled out. Those who act opportunistically today will lack supply security 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 there for you – our trade fair presence