Peak in Sight

Last week brought yet another round of sideways volatility. Butter prices bounced—mainly on futures—but ended the week slightly higher. Cheese markets painted a more complex picture: UK and Irish Cheddar are under pressure, Gouda and Edam remain stagnant, while Mozzarella continues to rally with surprising strength. Powder markets flirted with bullish momentum early in the week, only to settle right back to where they started as more offers entered the market.

With France theoretically past its milk peak and the rest of Europe close to it's seasonal peak, the million-euro question is: Have prices also peaked? Or will the seasonal milk drop push values higher again?

Fundamentals vs. Forecasting

If price behavior were tied neatly to seasonal milk flows, we'd all be market prophets. Unfortunately, that’s not how it works. This year’s low starting stocks for butter, tariff frontloading linked to Trump-era policies, New Zealand imports into the UK, and surging demand for high-whey proteins have collectively scrambled the usual logic. Add in nervous buyers still scarred by last year’s highs and sellers reluctant to move too early, and you get a market that, frankly, feels firmer than we would’ve forecasted.

When will these countervailing market dynamics start shifting the price curve? We assumed by now—but theory and practice rarely meet on schedule. It’s entirely plausible that this market holds above our expectations for another 3–6 months.

As long as this fog of uncertainty lingers, we believe buyers will keep placing a solid floor under cheese and butter markets. SMP? That one feels extremely rangebound. Day-to-day, we’ll continue to see volatility, but most buyers and sellers seem to have learned that waiting out short-term swings eventually returns prices to their long-term trendline.

Our forecast? That trendline holds—until it doesn’t.

Butter: Firmer, But Make It Confusing

Butter saw sharp price swings last week but ended on firmer footing. Polish lactic butter traded above €7,000, with Irish butter reaching €7,165 for June–August. Prices for NL/DE/BE origins firmed slightly, but buyer enthusiasm above €7,300 remains low.

Yes, we know. Our long-term bearish view on butter is starting to sound like a running gag. But it still holds. Retail sales are down in Germany and France, backed by anecdotal reports of lower end-user consumption. Production numbers in Germany are up year-on-year despite lower milk intake—indicative of broader EU patterns. January–February import figures are outpacing previous years, and our own brokerage signals increased import flows in the months ahead. Meanwhile, exports for the same period are weaker, even with frontloading to dodge US tariffs.

A simple formula:

Higher production + Higher imports – Lower exports – Lower consumption = Stock build-up.

Our mistake? Underestimating how long it takes to rebuild stocks to a point where sellers feel pressure and buyers feel full. We started from historic lows—reaching last year’s stock levels was step one. That point should be behind us now. The bearish fundamentals are in place. The bearish sentiment? That might take until Q3 to surface as real price pressure.

Market positions to kick off the week:

• Buyer for 2–4 loads Polish lactic butter @ €7,025 (May)

• Buyer for 4 loads Irish lactic butter @ €7,050 (July)

• Buyer for 6 loads NL/DE/BE butter @ €7,250 (Q3)

Swap proposals:

• Buyer for NL/DE/BE physical (September–Q4) vs. EEX Futures flat

• Buyer for 2 loads Solarec/RFC vs. Buisman @ €50 (May)

• Buyer for 6 loads Irish butter (June) vs. sale of 6 loads Irish (Q3)

Cheese: Mozzarella Madness

The cheese market continues to puzzle. Gouda and Edam see weak demand and mounting bearish sentiment. Polish offers are pressuring prices, although few sellers seem eager to move volume. Cheddar is feeling the weight of Irish and UK production. One partner even claimed they bought Cheddar cheaper than they sold Mozzarella—both first class.

Mozzarella, on the other hand, has gone parabolic (or at least much higher than most expected). Buyers appear caught in a short squeeze, surprised by a price surge they didn’t see coming. However, with Cheddar weak, demand lacking for Gouda/Edam, and increased mozzarella production capacity from recent years... logic suggests availability should soon increase, especially with Mozzarella buying the best valorization in cheese by far.

We believe the seasonal milk flush will feed straight into mozzarella production, easing prices in the coming weeks.

Cheese bids this week:

• Bid for 4 loads Mozzarella @ €4,150 (June–July)

• Bid for 6 loads Mozzarella @ €4,200 (Q3)

Powders: Back in Line

What more can we say? Scroll back through our last ten reports—this one writes itself. We’re back in the rangebound window. The upcoming GDT might offer some direction, though we expect it to lean slightly bearish for international prices.

Frankly, the biggest driver for powder prices in the coming weeks may not be milk flows or Chinese imports, but currency. Keep your eye on the USD vs. EUR.

Final Thoughts

The market is anything but predictable, but traders are adapting. Fundamentals point one way, sentiment another—but patience, as always, remains a strategy. The floor seems intact for now, but if and when sentiment flips, the market might just follow.