European cheese prices have drifted further from their spring peak as the summer slowdown sets in. With most buyers having covered their Q3 needs, sellers have little room to move beyond increasingly competitive spot trades. The tone is bearish, though relatively lean supply is still cushioning the market against a sharper drop.

The US is under heavier pressure. CME spot prices for cheese, butter and milk powder have all retreated over the past two weeks, with cheddar blocks settling at a four-month low of $1.46/lb as domestic demand stays sluggish and international buyers hold back. In Europe, the slide shows early signs of losing momentum, a stabilisation rather than a recovery.

European cheddar looks set to stay under pressure through the summer, with Irish, UK and Eastern European curd output weighing on the market and buyers pushing harder for concessions on commodity-grade volumes. Gouda has drifted lower in the same summer-lull conditions, with softer-than-hoped southern European demand and spot trades setting the tone, though some producers remain comfortable enough to hold their levels.

Emmental is holding up better. Allgäu Emmental has effectively entered its summer pause, with German exchange volumes too thin to quote, but demand for hard square cheese is described as solid and prices there are stable. An expected easing in French output after June should help rebuild Emmental’s usual premium later in the quarter.

Mozzarella remains the most balanced of the categories. It is benefiting from a seasonal demand uptick as buyers switch toward it over the summer, and the approaching European heat period should add momentum in fresh and foodservice segments. Producers have kept output high, drawn by its faster cycle and valuable cream co-product. The one soft spot: GDT Mozzarella fell 5% at the latest auction, a sign European exporters are competing harder internationally.

The wild card for the weeks ahead is heat. A hot spell typically curbs milk output and could tighten raw material just as demand for Mozzarella and fresh dairy picks up. For now, Vesper sees cheese broadly sideways to softer through the summer, with Mozzarella the likeliest to outperform and a meaningful recovery unlikely before activity returns in August.

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