Global Cheese Market Sees Diverging Trends Amid Production Changes
The global cheese market is experiencing significant shifts, driven by changes in milk production and demand dynamics. Since 2017, global cheese trade has grown by approximately 40%, a trend fueled by the strategic investments of major dairy producers and a shift toward higher-value products, such as cheese, amidst volatile milk prices.
Cheddar cheese, a globally produced commodity across regions like the US, the EU, and Oceania, has seen a price decrease of 6.5% over the last year according to Global Dairy Trade. This trend is attributed to strong milk production in key regions such as the US and New Zealand, where production has increased by about 2% and 4%, respectively.
In contrast, mozzarella cheese, primarily produced in the EU, has experienced a price increase of 1.3% over the past year. This rise is linked to reduced milk supplies caused by recent heatwaves in France, Germany, and the UK. The Energy and Climate Intelligence Unit reported an 'unprecedented decline' in milk supply during a June heatwave, with a single-day drop of 4.3% and a cumulative shortfall of around 16.5 million pints over nine days.
As a result, mozzarella now costs €3,448 per tonne, surpassing cheddar, which is priced at €3,138 per tonne. This inversion of price dynamics is unusual, as cheddar typically commands a premium. The last occurrence of this price reversal in the EU was in 2019, highlighting the extraordinary nature of the current market.
Future cheese prices will largely depend on milk production trends across different regions. While the US, Australia, and New Zealand anticipate rising milk volumes, the EU is likely to see a decline. Factors such as a previous increase in milk deliveries and higher costs for diesel and fertilizer, coupled with lower milk prices, have reduced incentives for EU farmers to increase production.
This evolving scenario may lead to a more polarized cheese market, with EU cheeses like mozzarella continuing to become more expensive, while global cheddars remain more affordable.
