Raw milk in Europe is hitting spot markets at unusually low prices of €0.10-€0.25/kg in mid-March, yet cheese stocks are tight and prices are firm across most varieties. The reason: cheese production capacity is running flat out, and strong export demand is absorbing everything being produced before stocks can rebuild.

With milk output growing 5% year-on-year, any producer with capacity is making as much cheese as physically possible rather than selling milk at spot. But capacity is the binding constraint, and not enough product is making it into storage to relieve the tightness in nearby delivery months.

Cheddar and Gouda: scarce spot availability

Cheddar and Gouda are both seeing firm prices, with spot availability described as scarce for April and May delivery. Export commitments made in Q4 and January have kept European domestic markets tight, with the young age of cheese currently trading confirming low stock levels at producers and traders alike.

The incoming seasonal milk flush is expected to bring some relief in Q2, but with capacity already running at full stretch, a sharp correction is not expected. For Gouda in particular, prices are unlikely to soften meaningfully until stocks actually start to rebuild, which could be several months away.

Mozzarella: firm in Europe, more competitive in the US

European Mozzarella prices remain firm, supported by solid consumption and continued export demand. Buyers who held off expecting lower prices are now paying up for nearby delivery. The most recent GDT results confirmed the tight tone across global cheese markets.

US Mozzarella production is expanding, with new capacity coming online that keeps American prices more competitive and could act as a ceiling on how far EU prices can rise. The stronger euro since mid-January has further eroded European export competitiveness, widening the price gap between the two origins.

Emmental: the exception

Emmental is the outlier in the current rally, trading broadly sideways while other varieties have pushed higher. European production remains elevated and offers are more plentiful, keeping prices relatively soft. The spread to other cheese varieties has narrowed, though the abundance of milk is limiting any near-term production adjustment.

For the full cheese market analysis, visit: https://app.vespertool.com/market-analysis/2810