July 23, 2025 – Market Analysis

The global cheese market is experiencing a notable softening as summer holidays take hold across Europe and domestic demand remains subdued in key regions. With the spring milk flush now behind us, production levels remain steady, but buyer interest has cooled significantly as companies have already secured their short-term requirements.

This combination of steady production and weak demand has left producers with ample inventory but limited options for clearing volumes. Spot markets are softening across multiple cheese categories as sellers look to move product, while export channels provide some relief—particularly for US-origin cheese—though not enough to offset domestic market weakness in both the US and EU.

Cheddar markets face mixed pressures despite export strength

Cheddar prices continue their downward trend, with the Vesper Price Index showing a decrease to €4,500 ($5,281/mt) this week. CME spot cheddar blocks fell another 1.75¢ to $1.6425/lb, reflecting the market’s struggle to find upward momentum.

Despite relatively good domestic supply in the US, demand remains weak, keeping downward pressure on prices. New US cheese plants are not yet operating at full expected capacity, creating uncertainty around milk prioritization and valorization that’s adding caution to producer planning.

Export demand for US cheddar remains strong, as competitive pricing compared to European and Oceanian levels makes US-origin cheese attractive internationally. However, this export pull hasn’t been sufficient to offset sluggish domestic market conditions.

Looking ahead, upcoming US tariffs of 30% on cheddar from Ireland and the UK could significantly impact the competitiveness of Irish and British products in the US market, potentially creating new opportunities for domestic producers.

European cheese categories show mixed performance

Emmental demonstrates relative stability compared to other categories, with the Vesper Price Index holding steady at €5,100 ($5,985/mt) this week. The market is characterized by strong demand and increased sales volumes, though availability remains limited as stocks stay tight across much of Europe.

Gouda markets appear broadly stable but carry a slight sense of weakness, with the Vesper Price Index unchanged at €4,120 ($4,835/mt). While spot markets for July and August have mostly settled after earlier softness, there’s little upward momentum in sight. Futures for Q4 have started to decline in recent weeks, suggesting market participants are reassessing expectations for any late-year price recovery.

Mozzarella shows signs of seasonal support, with European prices increasing to €4,135 ($4,852/mt) while US markets remain at €3,382 ($3,968/mt). Summer demand has begun to provide some support after a prolonged weak period, though this seasonal lift remains modest and hasn’t dramatically changed overall market dynamics.

Market outlook suggests continued pressure ahead

The broader cheese market faces continued challenges through the remainder of Q3, with little optimism for significant improvement. Currency headwinds are making European products less competitive in export markets just when the region needs those channels most.

While there’s no panic in the market, there’s limited enthusiasm either. Prices are declining across most categories, and without a pickup in demand or meaningful production cuts, the second half of Q3 looks set to remain flat at best.

Some market participants are looking toward Q4 with cautious hope, but current conditions suggest the market will need either a significant shift in demand patterns or further production adjustments to break out of its current holding pattern.

Additional risk factors on the horizon

Adding another layer of complexity to the market environment, participants are also monitoring two outbreaks of Lumpy Skin Disease recently acknowledged by the World Organization for Animal Health (WOAH) in Italy and France. This marks the first occurrence of the disease in these countries, and while milk and cheese supply chains remain unaffected for now, the situation introduces additional risk factors that market players are watching carefully as they assess future market conditions.

This analysis is based on Vesper’s proprietary market intelligence and price benchmarks. For a comprehensive analysis across all cheese categories, visit the Vesper platform: https://app.vespertool.com/market-analysis/2123.