Cheese markets across Europe and the United States are experiencing significant downward pressure as buyers delay purchases and sellers struggle to find demand, particularly in spot markets. The widespread weakness is affecting multiple cheese varieties including Cheddar, Gouda, Mozzarella, and Emmental.

Buyers adopt wait-and-see approach

Procurement teams are increasingly shifting toward spot purchasing strategies, expecting further price declines in Q4. This cautious approach is leaving manufacturers with unsold volumes and forcing them to lower prices to attract buyers or traders.

The reluctance to commit to forward contracts is creating a challenging dynamic where buyers postpone purchases while sellers feel pressure to offload inventory before prices drop further.

Global competition intensifies

Export competition is adding to market pressures, with New Zealand cheese exports up 14.9% year-over-year and US exports growing 13.6%. European exporters are struggling to compete due to less favorable pricing, with the Euro’s recent strength further hampening their competitive position.

US cheese markets are following the downward trend, with CME prices falling to $1.63/lb, tracking the broader decline in dairy markets. Production levels remain elevated, with US Cheddar production up 6.66% and raw milk production increasing 3.45% year-over-year in July.

Price movements across major varieties

The Vesper Price Index shows widespread declines across cheese categories. Gouda has seen particularly steep drops of more than €100/mt weekly over the past two weeks, reaching €3400/mt. Mozzarella prices have also fallen sharply, with the GDT event showing a 9.6% decline.

Current market dynamics show milk prices at €0.55/kg leading to cheese cost prices around €4300/mt for some varieties, indicating production is far from profitable at current price levels. However, high milk production volumes continue to fill cheese production capacity.

Outlook remains uncertain

The combination of ample supply, subdued domestic demand, and buyer hesitancy suggests further price pressure in the near term. While price support is expected to emerge eventually, the timing remains unclear as market sentiment continues to weaken.

For procurement managers, the current environment presents opportunities for spot purchasing but requires careful timing and risk management as price floors remain undefined.

This news article is part of a more elaborate market analysis. For the full analysis, go to: https://app.vespertool.com/market-analysis/2285