European dairy markets are experiencing a significant downturn as buyers step back from active purchasing, creating widespread price pressure across multiple commodity categories. The combination of strong production levels and hesitant procurement activity is driving prices lower throughout the dairy complex.

Buyer hesitation drives market weakness

The current market weakness stems from a fundamental shift in buyer behavior. Procurement managers are deliberately holding back, delaying purchases in anticipation of further price decreases before year-end. This cautious approach has left manufacturers with growing stock levels and increasing pressure to move inventory.

European cheese markets exemplify this trend, with buyers completing most of their Q4 coverage earlier in the year or switching to monthly purchasing strategies. The result is a market flooded with offers but virtually no bids, creating downward pressure on spot and forward prices.

Production strength compounds pricing pressure

Strong milk production across major producing regions continues to support high commodity output levels. European cheese production grew 1.52% year-over-year in the first half of 2025, while the United States recorded 1.66% growth. New Zealand’s cheese exports surged 17.98%, adding to global supply abundance.

This production strength is particularly evident in the butterfat market, where current output levels are at all-time highs. With most buyers already covered for 2025 and production maintaining its strong pace, the butterfat market faces sustained pressure.

Cheese categories follow broader market decline

Individual cheese varieties are reflecting the broader market weakness:

Cheddar prices are approaching the €4000/mt threshold, with European prices at €4200/mt. Stock pressure is mounting as offer volume increases faster than buyer interest, while major producing countries like the United Kingdom and Ireland report significantly higher production in the first half of 2025.

Gouda markets have weakened rapidly, falling from €4100/mt just one month ago to €3750/mt currently. Forward selling interest from manufacturers, combined with minimal buyer activity, continues to pressure prices lower.

Mozzarella pricing reflects similar dynamics, with European prices at €3700/mt while US prices remain competitive at €3450/mt. Stock buildups and slowly increasing ages at producers are driving the downward momentum.

Emmental markets show no signs of improvement, with prices at €4650/mt and continuing to decline as buyers remain notably absent from the market.

Market outlook remains challenged

The outlook for European dairy markets suggests continued weakness in the near term. The oversupply situation, while not as severe as the 2022 downturn that saw 40% price decreases, still presents significant challenges for price stability.

Global competition is intensifying as major producing regions maintain high output levels. The United States continues pushing additional cheese toward export markets, primarily targeting Japan, while New Zealand’s ramping milk season promises continued export availability.

For procurement managers, the current environment presents both opportunities and risks. While waiting for further price decreases may prove beneficial in the short term, the eventual market rebalancing could create supply tightness once production naturally adjusts to lower price levels.

The dairy market’s current trajectory suggests that patience may continue to be rewarded for buyers, though monitoring production trends and inventory levels will be crucial for timing optimal purchasing decisions.


This article is part of our full cheese market analysis. For the full market analysis, go to: https://app.vespertool.com/market-analysis/2244