From shortage to slight surplus

Q1 was defined by limited commodity cheese availability as export demand kept volumes moving out of both Europe and the United States, with spot buyers paying up week by week. At the start of Q2, that dynamic has shifted. Total cheese production is still showing a positive year-on-year trend, but the return to commodity-style output has added supply to the market faster than demand is absorbing it.

Competition for export destinations has intensified, with the EU and the US both producing aggressively. Domestic markets have more sellers looking to move volumes than buyers with an immediate need to purchase. Cheese consumption remains a supportive factor and continues to hold up well.

Gouda: limited activity, wide price range

Trade activity in Gouda has slowed significantly over the past couple of weeks, with limited pressure on either side. The transition from naturally ripened production back to commodity Gouda is underway, adding to available supply, while export demand at current European price levels is proving more difficult. The EUR/USD rate is also working against European exports.

Buyers who have noticed the recent price dip are holding back, waiting to see if prices ease further before committing. Larger Q3 volumes are expected to be contracted in a few weeks, which could increase traded volumes and provide some support.

Emmental: grating grade under pressure

Emmental prices are moving lower, driven by high production volumes following the premium the variety commanded through Q1 and strong milk output throughout that period. Grating-grade volumes are particularly heavy, while slicing-grade remains comparatively tighter. Buyers who previously purchased Emmental when its price was in line with Gouda and Mozzarella are switching back to cheaper alternatives.

Mozzarella: returning to typical discount

Mozzarella prices have moved lower in Europe, returning the variety to its more typical discount versus Gouda and Cheddar after being relatively overvalued for most of Q1. Production is at a seasonal high in Q2, with year-on-year increases in countries including Germany. The most recent GDT event confirmed the shift, with Mozzarella prices falling 5.9% to $3,950/mt.

Cheddar: EU quiet, US well-supported by exports

European Cheddar markets are quiet at the start of Q2, with this quarter already covered and Q3 coverage not expected to begin for several weeks. US Cheddar production recorded its 13th consecutive monthly record in January, up 4.7% year-on-year. Strong exports, up 10.7% year-on-year in January, are keeping US cheese stocks relatively low. US Cheddar currently trades at around a $500/mt discount to European Cheddar.

Outlook

Prices across cheese types are expected to remain under modest downward pressure through peak flush, given high supply and fewer export opportunities. Consumption is solid and should prevent a sharp correction. The market is expected to stabilise once Q3 coverage begins and peak flush production passes.

For the full dairy market analysis, visit: https://app.vespertool.com/market-analysis/2888