The continued poor market performance for commodity dairy products is really concerning.

Butter, cheese and powders continue to slide in price week on week. Butter dropped another €50/t this week or more depending on who you talk to.

The butter price in Europe is now just over €3,500/t, which, based off recent years, is now considered historically low.

ADVERTISEMENT

To put that in context, at butter’s lowest price in 2023, which was considered a difficult time, butter prices kept above €4,000/t even at their lowest. Even just three months ago, butter was making over €1,000/t more than it is today.

Cheddar cheese at €3,250/t is also under pressure, but cheddar has been less volatile than butter, but still trading at relatively low prices.

Even at its lowest point in 2023, it was trading at around €500/t more than it is now.

The cheese equation is different to butter, though, because of the whey element. With the huge increase in demand for whey protein either in the form of whey protein concentrate, whey protein isolate or demineralised whey, the value proposition from making cheese is still very high, even if cheese prices remain low.

With such high prices for whey, it is likely that we are going to see a two-tier milk price regime over the coming months between co-ops with cheese and whey facilities and those without.

I’m thinking here about Lakeland, Aurivo and Arratipp, which don’t make any cheese and so won’t benefit from the uplift in whey.

Meanwhile, the prices for dairy products continue to decline, with skim milk powder down €75/t and whole milk powder down €25/t over the last week.