European Dairy Markets Face Pressure as Cheese and Milk Powder Prices Align

Cheese prices in Europe have fallen to approximately €3,580 per tonne, equaling the price of whole milk powder (WMP), an unusual event that signals tension within the dairy sector. Historically, cheese has commanded a premium due to its higher processing and storage costs, but this parity now indicates significant market stress.

According to the Irish Farmers Journal, the price of butter has also dropped by €270 per tonne to €5,040, marking its lowest level in two years and representing a nearly 30% decrease over ten weeks. Concurrently, the Global Dairy Trade (GDT) results reveal ongoing price declines: WMP decreased by 2.4%, skim milk powder by 1.9%, and the overall index fell by 1.4%.

Analysts cite weak global demand, increased supply, and export difficulties as contributing factors to the downturn. This alignment of cheese and milk powder prices suggests intense margin pressure for producers and processors, particularly as input costs remain elevated.

The current market dynamics may prompt a strategic shift towards higher-value and niche dairy products to mitigate commodity volatility. The convergence of prices is not merely a short-term anomaly but rather a reflection of underlying structural strains within the European dairy economy.