Dairy market in the grip of a summer dip

A week ago we wrote that spot milk prices will be excellent in the second half of 2025 up to €60 per 100 kilos could rise. This optimistic scenario still holds, but the dairy market will need to bottom out in the coming weeks. Currently, there are quite sharp price drops, particularly for cream and butter. The peak of milk supply is only recently behind us, meaning there is relatively ample supply.

Supply from Eastern Europe 
Large quantities of butter and cream, particularly from Poland and the Baltic States, are being forced onto the market at significantly lower prices. This is coloring the overall sentiment on the European market. Cream is falling by €335 per tonne this week to €7.955 per tonne, after the price had already dropped sharply last week. The same applies to butter, which has fallen to €7.060 per tonne, its lowest level since December of last year.

Pressure on cheese prices continues
To a lesser extent, cheese prices also remain under pressure. As with butter, cheese stocks are still manageable, but there's no longer any shortage. The delivery dates remain relatively young. Demand, however, is very low, which can easily be explained by the holidays. Nevertheless, the price of Gouda foil cheese, at €4.145 per ton, has fallen to its lowest level in almost a year.  

Raw material value below milk prices
Based on the DCA quotations, the raw material value of milk is below payout prizes Prices have dropped, in many cases to around €55 per 100 kilos. The trend in recent months has been stable. The question is whether this will remain the case in August, given the declining dairy market, which is putting pressure on valorization. A reduction in milk prices will not help processors in their negotiating position. At the same time, bridging a period of poor margins is also a challenge. The current situation therefore places processors on hold.

Turnaround is expected
Although price drops are faster than expected, it's still often assumed that the market will recover in the second half of August. That's when the holidays are over and the trough in milk supply returns. This will likely create upward momentum in the market, although that could be disrupted if milk prices fall sharply next month. In that case, buyers will have a stick to beat them with.  

In general, the dairy market is highly dependent on European demand. Sales outside Europe are often under pressure, as evidenced by the export figures for skimmed milk powder. The strong euro, as well as the persistent milk surpluses, don't help matters. in China.