Cheese prices continue to rise stoically

When cheese prices were under pressure in June and July, it was a logical scenario that the quotations for Gouda and Edam would drop through the €5.000 per ton threshold and not rise above it for the time being. In August, however, the market unexpectedly picked up again. Gouda and Edam pay more than €5.200 per tonne and the trend is still rising. New price records are up for grabs.

Tight inventories support market
Tight stocks are fueling market sentiment. Just like the seasonal decline in milk supply, which will continue until November. Sentiment is also receiving extra support from the extreme drought in Europe. This could put an extra brake on milk production, although those signals are not yet visible in Northwestern Europe. Many dairy farms have their feed stocks reasonably in order and the high milk prices are an invitation to increase production. There are of course concerns about the poor conditions of the maize, but companies are not yet anticipating this.

The demand for cheese is good, partly due to the end of the holiday period. The high prices may deter buyers, but producers have the market on their side. For the fourth quarter, they are betting on prices of €5.400 per tonne or even higher. Sales to the food service channel are also described as good. Cheddar and mozzarella are particularly beneficial here, the prices of which are also rising.

Inflation continues to rise
Signs of a drop in demand due to high inflation are not (yet) visible, although the purchasing power of consumers is under considerable pressure. In August inflation rose further to 13,6%, Statistics Netherlands calculated this morning. Food inflation was more than 10% with dairy and meat as drivers. Nevertheless, consumers do not ignore cheese. This is probably because the substitutes (meat products) have also become considerably more expensive, so that there are hardly any fallback options. It should be noted that the final settlement of the energy bill should not be coughed up until the beginning of 2023. In the meantime, the cabinet will immediately come up with a purchasing power repair plan. It will be presented on Prinsjesdag. This may get rid of the sharp edges, but it won't take the pain away. 

In short: cheese prices do not seem to be at the top yet. However, the uncertainty in the market is great. Producers of the more expensive branded cheeses are in a difficult position. Bulk cheese producers are doing relatively better. They also currently pay out the highest milk prices, according to the Milk Price Comparator of Boerenbusiness. Dairy markets are on edge, with cheese perhaps being the most volatile at the moment.