Cream rises to the top on its own. What remains below is for the Armailli to turn into money.”Antoine the Cheese Artist, Gruyères, circa 1680: a character from a historical novel who accompanies us in every good cheese cellar.

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Review and outlook

European milk volumes are proving more resilient than we expected two weeks ago. Collections in Germany and France have recently stabilised. Spot milk prices remain broadly unchanged, while rising farmgate prices encourage additional production. We therefore withdraw our expectation of a widespread raw milk shortage.

Year-on-year comparisons could turn negative towards the end of the year. Current production will then be measured against the high volumes recorded in late 2025, partly due to delayed calving. A decline against this high base would not, on its own, indicate a shortage. In New Zealand, we await the October peak. Whether, and to what extent, El Niño affects subsequent production remains uncertain.

Demand for high-protein dairy products remains robust. This does not mean that all protein prices are rising: WPC80 and WPI90 are weakening, while skimmed milk powder is gaining sharply. In the US, other dairy products are increasingly absorbing milk that would otherwise be available for drying. High US SMP prices also support Europe. Butter, meanwhile, remains under pressure from high frozen stocks.

Direct processing into MPC85 or micellar casein also competes for milk. The available reports do not yet show how far this is constraining European powder and cheese production. For semi-hard cheese, low stocks and deliveries of young cheese suggest that a price floor is forming. A broad price increase would require a further tightening of available supply. Mozzarella and Cagliata remain under mild price pressure.

Our recommendations remain: October covered, with the quantities already secured for November and December in place. We leave the balance open until our reassessment in week 44. The first tranche for Q1 2027 also remains secured. SMP is the exception: waiting since September has increased purchasing costs.

Recommendations: restraint, except for SMP

Autumn: October requirements should be covered.

November/December: Most requirements were secured following our recommendation in Newsletter 171. Given the good milk supply, we continue to wait before covering the balance. We will reassess in week 44.

SMP is the exception: we recommend securing the remaining requirements now. Demand is good and available supply is limited. At current prices, purchased skimmed milk concentrate cannot be dried profitably. We therefore see further upside potential. For butter and WPC80, we are holding off on additional forward purchases.

Q1 2027: The first tranche was secured following our recommendation in Newsletter 171. For the balance, we await the results of New Zealand’s October peak. SMP is again the exception: we recommend increasing coverage. We continue to buy butter and WPC80 on the spot market.

Our calls reviewed: week 40

Changes in reference prices since each recommendation.

13 July, “Buy”: Edam from €3.05 to €3.51/kg (+15.1%), Gouda from €3.12 to €3.52/kg (+12.8%), Mozzarella from €3.40 to €3.44/kg (+1.2%), SMP from €2,710 to €3,380/t (+24.7%).

27 July, “Fully cover Q3, tsunami thesis”: Edam +7.7%, Gouda +7.0%, Mozzarella -1.1%, SMP +23.4%, spot milk +28%, cream +19%, butter -1%.

24 August, “One level higher”: Autumn and October coverage reaffirmed. Since then, Edam +3.8%, Gouda +3.8% and SMP +9.9%, while Mozzarella fell by 6.3%. Most November/December requirements were secured. The balance remains open until our reassessment in week 44, with today’s exception for SMP.

21 September, “Restraint for the balance”: First interim assessment after two weeks: Edam -0.8%, Gouda -0.8%, Mozzarella -2.0%, butter -3.9%, SMP +5.3%. Against these reference prices, waiting has so far been beneficial for cheese and butter. For SMP, it has increased purchasing costs. We therefore recommend additional coverage now.

Milk collections (week 38)

• Germany: +0.2% week on week, +1.3% year on year
• France: +0.8% week on week, +0.2% year on year

Europe in August

Europe’s milk surplus is narrowing, with milk solids weakening faster than volumes.

• Germany: August +3.1% (June/July both +5.8%, H1 6–7%); January–August +6.0% to 22.97 million tonnes. Fat -1.0% to 3.96%, protein -0.6% to 3.42%, limiting milk solids growth to +2.2%. Organic collections turned negative for the first time (-1.1%).
• France: August 0.0% after three months of decline (May -1.4%, June -1.2%, July -0.2%); January–August +1.9%. Protein +0.6% to 3.25%, fat -0.3%; milk solids +0.2%. Organic collections -14.1%.
• Netherlands: August +0.7% (July +3.1%, H1 4–6%); January–August +4.0%. Fat +0.9% to 4.36%, protein unchanged at 3.64%, allowing milk solids to rise by 1.2%.
• Poland: August milk volumes +0.3%, but fat -2.3% to 3.88% and protein -1.5% to 3.31%, leaving milk solids down 1.6%. January–August volumes +2.7%, milk solids only +1.7%. Organic collections -21.4%.
• Milk prices: EU average in August €42.75/100 kg (July €41.80), down 19.7% year on year. France €44.59 (-10.6%), Netherlands €42.50 (-24.4%), Poland €41.45 (-22.3%), Germany €41.15 (-24.2%). Recovery has begun, but the gap to 2025 remains wide.

GDT Pulse 118 | 30 September 2026

Skimmed milk powder, whole milk powder and butter rose by around 1.5–1.6% compared with Pulse 117 and also exceeded the comparable prices at the previous GDT auction. Only anhydrous milk fat (AMF) eased slightly against the previous Pulse event.

Cheese

• Flower Meadow cheeses, raw milk/premium: Good demand. Except for Allgäu Emmental, prices are at or above last year’s levels, with Parmigiano 10% higher. The trend remains upward.
• Standardised, pasteurised cheeses: The cheese market is slightly firmer overall, with active trading. Emmentaler and Cheddar Curd show the largest gains, while Mozzarella, Cagliata, Maasdam and naturally matured cheeses are weakening. Many retail contracts remain open; uncertainty over future milk collections and cheese output makes pricing more difficult.
• Volume/decanter cheeses: Limited supply, mainly frozen product. Fresh product is expected to follow the higher price level.
• Hi-Lo, high protein/low fat: Except for grated cheese, the products tracked remain well below last year despite the September increases.

Milk powders

• SMP: Skimmed milk powder has risen to almost €3,400/t. Market reports indicate that the US protein boom is diverting milk away from powder production and supporting European prices through the world market. Whole milk powder and fat-filled milk powder are following more slowly, while whey powder remains stable to slightly firmer on limited supply.
• WPC80/WPI90: At €23,000/t, WPC80 is around 18% below its peak of over €28,000/t three months ago. Sports nutrition and retail buyers are resisting these prices and switching to blends with MPC85 (around €16,000/t) or micellar casein. WPI90 has held up better. Alternative products remain limited in volume and in the number of reliable suppliers, and their functionality differs. Overall protein demand is not weakening; the question is whether buyers return to WPC80 or the market broadens permanently.

Liquid dairy markets

Skimmed milk concentrate has recovered from last week’s decline, while whey concentrate has eased; both remain too expensive for profitable drying. Spot milk is broadly stable, and milk volumes in Northwest Europe are expected to start rising again over the coming weeks.

Milk fat

High stocks have pushed butter down to €3,945/t, with frozen product under particular pressure. Cream and AMF are also weakening on subdued demand. There is no sign yet of a meaningful increase in Christmas demand.

Switzerland: protein gains, fat languishes

Swiss milk volumes fell below the previous year’s level in July for the first time this year. The decline was 2.9%. Market feedback points to a rapid recovery in August. For September, market participants are already reporting volumes in line with last year. Following strong growth in the first half, supply therefore remains good.

Demand in Switzerland is also shifting towards high-protein products, led by cottage cheese. For traditional AOP varieties, we observe growing difficulty in sustaining high prices. Meanwhile, good milk fat availability is meeting full butter stores.

The base price for milk from silage-fed cows in our price table also illustrates the difficult Swiss market: during most of 2026 so far, it has been below the B-milk reference price. Throughout the period covered in 2025, it was above it.

Quarterly price trends

Q4 2026

• Flower Meadow cheeses: stable, seasonally firm
• Gouda/semi-hard cheese: sideways; stabilising after two slightly weaker weeks. Some October increases have been accepted, while the remainder face resistance
• Mozzarella: weaker, below semi-hard cheese for the first time; a floor is in sight
• Cagliata: follows semi-hard cheese, with block Mozzarella limiting the upside
• Hi-Lo: sideways, protein firm
• SMP: firm, active trading, concentrate above the break-even level for drying, US prices well above Europe
• Butter: weaker, below €4,000/t, high stocks; cream has turned lower
• WPC80/WPI90: weaker, WPC80 around 18% below its peak, with MPC85 blends as an alternative
• WMP: sideways
• Whey powder: firm, with fractionation tightening supply

Q1 2027

• If New Zealand weakens (a weak October peak, with El Niño affecting production towards year-end): cheese higher, SMP higher, butter higher once stocks have fallen, whey proteins sideways
• If New Zealand holds up (peak at or above last year’s level): cheese sideways, Mozzarella under pressure, Cheddar sideways, SMP sideways, butter weaker, whey proteins weaker

Market drivers reviewed

1. Low EU milk prices: confirmed (EU August average €42.75/100 kg, -19.7% year on year; Germany -24%); recovery has begun.
2. Higher energy and fertiliser costs: less pronounced; crude oil has fallen 6% in three weeks to around $100.
3. Heat and drought in Central Europe: confirmed; collections are declining seasonally, but remain 1.3% above last year.
4. Falling milk prices in New Zealand: not confirmed; Fonterra has raised its forecast by NZ$0.25 to NZ$9.50/kg of milk solids, equivalent to around €0.35/kg of milk.
5. El Niño: officially confirmed; its effect on milk volumes will only be measurable towards year-end.
6. El Niño rainfall in South America (November/December): still uncertain; Argentina’s August milk production was up 2.2%.
7. The US cannot offset declines elsewhere: less clear-cut. US milk production rose 1.7% in August, the lowest rate this year, while cow numbers were also up 1.7%. US powder prices are above Europe, while US butter and cheese are far below.
8. Demand from the Middle East and China: confirmed; German SMP exports rose 16% in January–July, while EU butter exports increased by 38%.

Removed: cow slaughterings have been below last year again since week 38. The high comparison base from autumn 2025 makes this an unsuitable indicator for Q4.

New countervailing factors: New Zealand produced 5.0% more milk through August, with August alone up 2.2%; Q4 forward prices are at spot levels; the dollar has strengthened by around 3% in three weeks.

European milk volumes confirm the direction: we no longer expect a shortage. Prices depend on whether New Zealand can maintain its year-on-year lead through the October peak and the effects of El Niño.

Strategic outlook: strategy beats opportunism

Milk supply is more resilient than expected. This points towards market balance rather than the shortage we had feared. Reliable supplier relationships are especially valuable now: buyers who have secured their core requirements can purchase additional volumes selectively or wait before covering the balance. A price correction is no reason to replace trusted partners.

Strategy means preserving this choice: buying when market conditions warrant it, and waiting while the direction remains unclear. For skimmed milk powder, our current assessment favours additional coverage.

We continue to offer long-term contracts to partners who want to plan their supply on this basis.

Meet us at the trade fairs

• SIAL, Paris: 17–21 October 2026 (Hall 7, Stand B002)
• Marca, Bologna: 13–14 January 2027
• Cibus, Parma: 4–6 May 2027
• Mondial, Tours: 12–14 September 2027

Treat yourself to an authentic Swiss Flower Meadow cheese made from raw milk. A pleasure to savour, and a little joy for the soul. Warm regards, Affineur Walo

A transparent market is resilient. We provide transparency.

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These forecasts are based on our market experience and do not constitute definitive predictions. We accept no liability for their accuracy or for deviations