Summer is still a long way off on the agricultural market too

The Christmas holidays are upon us, bringing with them a cold Russian season. The year is almost over. 2025 was marked by rapidly declining agricultural commodity prices. This began this spring with a plummeting potato price, and since the summer, pork and milk prices have also been on the chopping block. Taking stock, a few things become clear: high prices provoke lower prices, and the influence of global trade policy on agricultural markets is significant.    

The price drop has been, all in all, severe. A few examples: Pig prices have fallen over 20% since January, milk prices nearly 25% and haven't yet bottomed out. And potato prices plummeted, losing 75%. The story doesn't end there. Global commodities like sugar and wheat also slid further to pre-war levels in Ukraine. The uncertainty premiums that crept into the markets at that time have long since evaporated. Meanwhile, the conflict in Eastern Europe continues to rage.

Overproduction in milk
A few years ago, it was sometimes thought that low agricultural prices were a thing of the past. The likelihood of milk prices rising to one euro was greater than a return to 30 cents, so it was argued. This was a vain hope, as various payout prices will likely be back to a three in January.

The dairy market is still in a slump. High milk prices and low feed costs have fueled such a strong global overproduction that market recovery is still nowhere in sight. Incidentally, the overproduction was helped along by low grain prices, which has made pellets affordable again. Conclusion: production always follows high prices, as has already been the case. hundreds of years the case is.

Potato not cash crop
The potato market is no different. Due to the rapid expansion of the processing industry's capacity in Northwestern Europe, every potato – labeled by banks as the ideal cash crop – being well paid. Expanding their land area wasn't a problem, even on lands belonging to farmers who were retiring. 

However, the fact that demand for the final product is crucial has been overlooked. Emerging markets like India and China are currently overwhelming the global market, and cold storage facilities in our part of Europe are overflowing with fries. High cultivation costs and expensive land make it difficult to be competitive.

The Netherlands not the centre of the pig market
Pig prices also had a good chance. Due to lucrative buyout schemes in the Netherlands, slaughterhouses were reportedly fighting for the last pigs. The reality is more complex. The Netherlands is not the center of the global pig market, as it turns out. Countries like Denmark, Spain, and especially Brazil significantly increased production, resulting in substantial net growth.

The pig cycle is at work. And China is not responding to the market and has more than enough pigs to provide its population with meat. Meat is therefore being used as bargaining chip in conflicts that have nothing to do with food. import duty The measures imposed on European slaughterhouses in December for a period of no less than five years are direct retaliation for the European import duties on Chinese electric cars. 

European dairy exporters also received a similar warning this week provisional levy imposed, although this does not directly impact exports. China is currently ignoring milk and whey powder, which are by far the largest European export flows.  

Headwind due to strong euro
Meanwhile, in 2025, the currency ghost quietly crept onto the farm. Market attention often focuses on grain yields, slaughter numbers, and milk volumes, but the currency market is at least as important a factor in sentiment. The strong euro is creating headwinds for agricultural exports, on which the Netherlands is heavily dependent. As long as the dollar's weakness persists, European exporters will be at a disadvantage. 

But... markets always exaggerate
In short, many agricultural markets have not been doing well this year. Only eggs and chicken meat appear immune to price pressure due to the disruptive effect of avian influenza. What are the prospects for 2026? It's already shaping up to be a lean year for the arable, dairy, and pig sectors. As long as overproduction persists, price recovery is unlikely, and many farmers will be forced to produce below cost. 

At the same time, sentiment remains an elusive thing. A rule of thumb is that markets always exaggerate, both positively and negatively. That offers some stability. And, as a Belgian once said to me: "When the night is at its darkest, the dawn is near." The shortest day of the year is already behind us, although the reset on the markets will likely take some time. 

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness and Food Business. He also closely follows the raw materials markets and focuses on animal proteins such as dairy and meat. He regularly interviews leaders from the agricultural sector and the food world.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.