Uncertainty trumps the cheese market

The cheese market is supported by the persistently tight supplies as a result of the reduced milk supply in Europe. Although cheese provides the best valorisation on paper, milk remains absent from the cheese tray. In the first four months of this year, cheese production fell by 3,3% to 315.000 tons, compared to the same period last year. Even then, cheese production was already declining. Which means that the significantly expanded processing capacity in our country is not being used optimally.

Slowly increasing trend
The DCA quotations for Gouda and Edam move around the rate of €5.200 per tonne and show a slightly increasing trend. The same goes for cheddar and mozzarella. This will cancel out the dip from mid-April. It is currently relatively quiet in the cheese trade, insiders indicate. Buyers appear to be scanning the market and considering what's to come in the third quarter. Both retail and food service find it difficult to conclude long-term contracts, because there are great uncertainties in the market.

Cheese prices do not have a clear seasonal pattern, but it is certain that milk production will decline further in the third quarter. The production volumes of cheese in our country will then not exceed 80.000 tons, which means that the supply will dry up. But what will the question do? There are reports of a drop in demand now that retail prices are also rising.

Economists say that inflation only really becomes noticeable in the wallet after the summer holidays. The retail sector puts forward this argument in price negotiations, but so far cheese producers are holding on to the high prices and are also committed to further price increases. There is talk of tough negotiations, with producers usually winning.  

Historical frameworks disappeared 
The market is aware that trees do not grow to the sky. Intuitively, cheese prices are at the top, but that was also the idea in mid-February when Gouda and Edam were still trading below €4.500 per tonne. Even passing the psychological limit of €4.000 was considered impossible by some.

The conclusion is that the dairy market has broken with the historical price laws across the board. Butter and milk powder prices are also moving at previously unreached levels, including milk prices, which are now moving towards €60 per 100 kilos. In short: the cheese market is full of uncertainty, but is currently relatively calm.