After a firm Q1 in which strong export demand kept European cheese markets relatively tight, the balance of power is shifting at the start of Q2. High production, softening export demand, and a less favourable exchange rate are increasing the pressure on sellers, with prices across Cheddar, Emmental, Gouda, and Mozzarella all showing early signs of weakness.

The Q1 dynamic

Throughout Q1, cheese production ran at full capacity while availability remained relatively low. Export demand was strong enough to keep stocks lean across both European and U.S. cheese markets, keeping sellers in a strong negotiating position. Buyers who needed cheese paid a slight premium. That situation is now changing.

Sellers who were under no pressure to negotiate in recent months are now finding themselves with Q2 volumes to move. With production still high and export demand less eager to lock in at current prices, cutting prices to trigger demand is becoming necessary for some.

A further complication: the U.S. dollar is not working in European exporters’ favour at current levels, making European cheese less competitive internationally.

Cheddar

The European Cheddar market saw relatively stable prices throughout Q1, supported by consistent production, even as other cheese types moved higher. At the start of Q2, the dynamic is similar but with slightly more pressure to sell, leading to small price reductions to stimulate buyer interest. Trading volumes remain limited.

European Cheddar is facing additional competition from the U.S., where cheddar is trading at a significant discount. With U.S. production still running at high levels and the need for exports remaining large, U.S. cheese is expected to maintain its pricing advantage for international buyers, particularly in Asia.

Seasonal production increases from Ireland and Poland are expected to add more Cheddar supply in Q2, though the preference among manufacturers for Cheddar production has reduced.

The outlook points to slightly lower European Cheddar prices through Q2, with the U.S. market also slightly weaker.

Emmental

A large milk surplus in Northwest Europe, combined with relatively high Emmental prices and a longer ripening period, drove significant Emmental production at the start of Q1. Once the price premium for Emmental began to fade, production fell quickly, which helped the premium return. However, markets feel weaker again now.

Cheaper volumes remain in the market looking for buyers in Q2. Buyers are also switching back to less expensive cheese types now that Emmental is trading at a higher price than alternatives such as Gouda. The relatively low premium compared to historical levels is expected to discourage Emmental production, while buyers favour cheaper alternatives. The two dynamics should keep each other in check to a degree, but the weaker sentiment is difficult to escape in the near term.

Gouda

The European Gouda market has started to feel noticeably weaker in the final week of Q1. Several manufacturers are currently in the market with volumes to sell, and the price range has widened significantly.

A large portion of Q2 volume has already been sold in recent weeks, meaning not all producers are under equal pressure. However, the higher prices for commodity-style Gouda in recent months have incentivised increased production for Q2, and that volume still needs to find a home. Export opportunities are limited at current price levels, which means most of that supply must be absorbed domestically.

Buyers are currently holding back, watching to see how far prices move before locking in volumes. At the same time, forward and futures markets are pricing Gouda at historically low levels, which does provide some incentive to fix prices further out.

The outlook for Q2 is for slightly lower prices, though strong domestic demand should prevent any sharp declines.

Mozzarella

Mozzarella markets are showing similar weakness, both in Europe and the United States. High profit margins for Mozzarella production have pushed manufacturers to run facilities at full capacity. With production running high and export demand not keen to commit at current prices, the pressure to sell has increased over recent weeks.

European Mozzarella prices have returned to a discount relative to other cheese types. In the U.S., production is at historical highs, and the discount to European prices is helping to prevent stock build-up. Still, meaningful price gains are proving difficult to achieve given the need for export demand to keep stocks in check.

Read the dairy market outlook for free in our dairy H2 outlook report: https://vespertool.com/download/dairy-h2-2026-market-outlook/