June 25, 2025 – Weekly Market Analysis Preview

European cheese markets are experiencing a notable shift as buyers step back from active trading toward the end of Q2, creating mounting pressure on manufacturer inventories across key cheese categories. While global events continue to create volatility in financial markets, the cheese sector is moving at its own deliberate pace, with distinct patterns emerging across different varieties.

Key market developments this week

Mozzarella Under Pressure: The most significant movement this week comes from the mozzarella sector, where prices are declining rapidly as quarterly demand winds down. European mozzarella has dropped to €4,150/mt ($2.19/lb), while US markets show an even steeper discount at €3,604/mt ($1.90/lb), creating potential export arbitrage opportunities.

Cheddar Markets Diverge: The Vesper Price Index for cheddar decreased to €4,600/mt ($2.42/lb) this week, with Ireland and the UK experiencing particular pressure due to high availability during peak milk production season. Meanwhile, US cheddar markets have seen dramatic declines, with CME prices falling nearly 20% since early July to as low as $1.595/lb.

Stability in Premium Segments: Emmental prices held steady at €5,100/mt ($2.69/lb) as earlier unsold volumes have been absorbed by buyers who covered their Q3 requirements. Limited production capacity continues to support this market despite broader sector weakness.

What’s driving current market dynamics

The current market environment reflects several converging factors:

  • Seasonal Production Peak: Milk production is at seasonal highs across Europe, leading to increased cheese manufacturing capacity
  • Demand Timing: Most buyers have already secured their Q2 and early Q3 requirements, reducing immediate purchasing pressure
  • Currency Headwinds: Unfavorable exchange rates are hampering export opportunities from key European producers
  • Strong Consumption Fundamentals: Despite pricing pressure, underlying consumption patterns remain robust

Regional variations create trading opportunities

The analysis reveals significant regional disparities that savvy traders are monitoring closely. While European markets face inventory pressure, varying production costs and currency movements are creating arbitrage opportunities between regions.

Why this matters for dairy professionals

Understanding these market shifts is crucial for:

  • Procurement Managers timing their purchasing decisions
  • Cheese Manufacturers managing inventory and pricing strategies
  • Traders identifying arbitrage opportunities between regions
  • Financial Analysts tracking dairy commodity exposure

Market outlook: cautious optimism

While near-term pressure is evident across most cheese categories, the analysis suggests limited downside potential due to strong consumption fundamentals and relatively high milk prices providing cost support. The summer holiday season may extend current quiet trading conditions, but underlying market fundamentals point to potential recovery in H2 2025.

Read the full week 26 Cheese market analysis on the Vesper platform here: https://app.vespertool.com/market-analysis/2037