Cheese prices are climbing across Europe on the back of a supply squeeze, even as demand stays unusually active for August. Cheese production capacity should be running flat out at this time of year, and mostly is, but the milk behind it is thinning out. Drought and higher temperatures have pulled down milk intake, and the fat and protein content of what is being delivered has dropped too, cutting the total volume of cheese that plants can actually make.
The tightening shows up differently by variety. Cheddar is the most exposed to competition, with Europe, the US and now New Zealand all chasing the same demand, which keeps a lid on how far prices can run even as European output slows on more expensive spot milk. Emmental has turned more bullish: its price range has widened sharply as spot milk that used to flow into Emmental and Cheddar production dries up, leaving buyers who need a specific type paying a real premium. Gouda is tightening for the same underlying reason, supply rather than a sudden jump in demand, with the age of delivered cheese getting younger as forward cover runs thinner. Mozzarella is the standout: prices jumped at this week’s GDT auction, reflecting both the supply squeeze and the urgency of demand through a warm European summer that has kept consumption elevated. US mozzarella remains relatively expensive too, on the back of thin availability and solid seasonal demand.
The read-through for the rest of the year comes back to one variable: milk. If intake in Europe, the US and New Zealand holds roughly where it is, total cheese availability should be manageable. If it falls further, the market could see prices above €4,000 a tonne for cheese before long. Mozzarella looks set to stay the most expensive cheese, relatively speaking, at least through the third quarter, while Cheddar stays the cheapest corner of the market on export dependency. Gouda and Emmental sit in between, both leaning firmer as the milk shortfall works its way through the rest of the complex.
