Milk shortage in Europe supports mozzarella prices

The global cheese market continues to expand amid rising demand and significant investment by dairy companies in new production capacity. Major producers have substantially increased output in recent years, while global cheese trade has grown by around 40% since 2017.

However, price trends vary significantly depending on the type of cheese and producing region. According to Global Dairy Trade, cheddar prices have fallen 6.5% over the past 12 months to around €3,138/t. Prices are under pressure from ample milk supplies in the US and New Zealand, as well as a significant expansion of US cheese production capacity.

The mozzarella market is moving in the opposite direction. Reduced milk production in Europe following heatwaves has pushed mozzarella prices up 1.3% year-on-year to €3,448/t. As a result, mozzarella has become more expensive than cheddar, although cheddar typically trades at a premium. According to Rabobank, the last time a similar situation occurred in the EU was in 2019.

Further price developments will largely depend on milk supply. US milk production has increased by around 2% over the past year, while New Zealand output has risen by 4%. Further growth is expected in the US, Australia and New Zealand, while the outlook for the EU remains weaker. European producers are facing high fuel and fertilizer costs, while milk prices are around 30% lower than a year ago.

Against this backdrop, price trends across the global cheese market could become increasingly divergent. Expanding production and processing capacity in the US is expected to put pressure on cheddar prices, while limited milk supplies in Europe could continue to support mozzarella. At the same time, further growth in global cheese trade will intensify competition among the major producing regions.

Tags: EU, Milk, support, Cheese, mozzarella