After a substantial write-down in the fourth quarter and a subsequent period with few price fluctuations, the cheese market is on the rise again. The fact that cheese prices are on the rise right now is striking in several respects. The market is firmer than initially thought.
Although the quotations are still lagging behind, cheese prices (Gouda, Edam and Mozzarella) are moving at, or even above, the level of €3.500 per tonne at the end of May. This means that the cheese market is once again above the long-term average. The market has been picking up quite quickly in recent weeks, after the previous weeks were all about stability.
Unexpected
Few people saw the price increase coming. It was thought that the market would remain stable during that peak in milk supply, or possibly even come under pressure. After all, cheese production is at its highest at this time of year. In 2022, cheese production in the Netherlands would only exceed 80.000 tons in May. A lot of milk is currently going into the cheese bin. The production volumes for the months of April and May will therefore in all likelihood amount to (well) 80.000 tons.
Despite the high production figures, cheese companies experience little delivery pressure. The volumes supplied are often young and stocks are described as tight to normal. This means that sales in recent months have probably been less bad than expected. However, companies say they are experiencing a drop in demand due to high (food) inflation, which affects the purchasing power of consumers. This may be an opportunity for private label producers, but a concern for the more expensive brand cheese producers.
Export demand
What is also driving the market at the moment is export demand. The southern member states such as Spain and Greece are entering the tourist season and are therefore scaling up their purchases. This also explains the fact that mozzarella flavoring attracts the fastest. In contrast, retail demand in Northwest Europe is described as weak by prominent producers. Sales to food service are proportionately better. In any case, recent price increases on the cheese market have woken up buyers again. Buying interest has also recently arisen for the third and fourth quarters.
Cheese is currently driving sentiment on the dairy market. This also lifts the butter and milk powder market, where stocks are perceived as much larger. It is still uncertain whether the price revival is an erratic outburst, or whether it will take further shape in the coming weeks and months.