Analysis milk
US-China tariff war creeps into EU dairy market
Not frontally, but from the sidelines, the effects of the tariff war between the US and China in particular are also being felt in the EU dairy sector. The effect is most clearly felt on the market for lactose and to a lesser extent for whey permeate.
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In all fairness, the price of lactose in the EU was already on the rise this year before the US announced high import tariffs. The availability of good quality lactose is apparently tight, but in recent weeks the price has shot up even further. In the latest GDT auction the price of the European product offered there even rose by more than 22% in one go. In February there was also a considerable price increase, but at 17,7% it was still more limited than now at the last auction.
There is a good chance that further price increases will follow. This does not set a record yet, which stands at almost €1.475 per tonne and was reached just after the Russian invasion of Ukraine in March 2022. On this week's GDT, the price went to €1.210 per tonne.
This product cannot therefore be an alternative for a large part of the American lactose, which mainly goes to China as cattle feed, while the European product is mainly sold as a high-quality medicine carrier or as an ingredient for infant nutrition. The GDT price for (European) lactose is not necessarily the highest concluded price. Lactose is also sold at even higher prices, but on the basis of very specific product requirements. On average, the Europeans are more active in the segment of high-quality lactose and the Americans in the cheaper segment, as is also partly the case with whey powder.
With an export in 2024 of 490.000 tons of lactose, of which 110.000 tons went to China, the US is also a real mass exporter. The EU only puts in a few tens of thousands of tones against that. The average price of the American product was $835 per ton, American sources report.
The Chinese counter-tariffs make this product much more expensive and it is no longer interesting for the Chinese, unless the American exporters lower the price considerably. This is already happening in many cases, because the lactose has to find a destination. Also, part of the old export volume will disappear. European suppliers benefit from this, as can now be seen. The American export of feed whey and whey permeate to China is also affected by the tariff battle, but there is still less of these brands in Europe.