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August brought a modest pickup in global dairy activity after the July holiday. While European markets remained relatively quiet, renewed interest from Southeast Asia and steady MENA buying helped stabilize demand across powders and fats. Shipping constraints across North European ports remain a challenge, but freight rates are holding steady for now.   

The EUR/USD exchange rate remained relatively stable throughout the month, hovering around 1.15-1.18, with limited volatility caused by geopolitical outbursts, of which there have been many in recent months.   

September opens with a downward correction that began in late August. Despite some early optimism after the summer break, fundamental across fats and powders worsened further. Freight disruptions in Europe, sluggish Chinese and SEA demand, and better than expected milk availability in key regions have pulled sentiment lower. Spot liquidity is still functioning, but most Q4 interests are cautious and opportunistic. A buyer’s appetite remains uneven, with many preferring short-term coverages over long-term contracts. However, the MENA region still must cover its Ramadan demand, so this might back demand in Q4.   

Milk Collections  

EU + UK 
Milk collections across the EU-27 and UK remained stable, estimated at + 0.67% YoY. Hot, dry weather capped output gains in Western Europe, though the Eastern and Central regions saw steady volumes. Farm margins remain positive, though feed costs have ticked up. Milk collections are now forecasted at +0.55% YoY for September, with gains in Ireland and Poland offset by weaker volumes in France and Southern Europe.   

United States 
US collection remained robust volumes up +3.45% YoY in August, significantly exceeding the USDA’s +2.6% forecast. In September, collection was up +3.2% YoY, with component-adjusted growth at +4.5%. Herd numbers are stable, and yields have improved, steady feed economics. August growth also exceeded expectations at +3.45%, marking the second month above +3%. The USDA hasn’t revised herd size down yet, signaling more bullish output heading into Q4.   

New Zealand 
NZ collections are up +2.2% YoY for August & up +2.5% YoY for September, supported by excellent pasture conditions and herd fertility. August shipments confirmed strong early-season output. Processors expect robust volumes through October. NZ remains well-positioned as a competitive export origin heading into Q4.  

GDT Data  

GDT- September 2 Results:   

• AMF –2.7% to $6,784/MT 
• Butter –3.3% to $7,241/MT 
• BMP –2.5% to $2,776/MT 
• Cheddar –5.1% to $4,357/MT 
• Mozzarella –2.6% to $4,636/MT 
• SMP –1.8% to $2,735/MT 
• WMP –2.9% to $3,815/MT 
• Lactose – Not offered 

Fat markets are weakening, with butter and AMF falling in two consecutive GDT events, despite low stocks in the EU and NZ. BMP is under pressure from aggressive offers and weak demand. Cheddar remains volatile, while SMP and WMP continue to drop amid slow Asian offtake and high coverage. Overall, demand across MENA and SEA is patchy, prompting seller-led corrections.  

SMP prices held stable through August, averaging EUR 2,350–2,420/MT FCA, depending on brand and shipment terms. Demand remained opportunistic, with steady but cautious buying from MENA and Southeast Asia. EU SMC values stayed firm above EUR 2,000/MT, helping support the price floor, even as global demand softened.  

In September, SMP prices eased toward EUR 2,300–2,360/MT FCA, mainly from French and German origins. Europe is no longer the most competitive origin, with US SMP now trading at lower levels. Chinese buyers remain well covered, futures volumes are thin, and most buyers are stocked through October. Q4 contracts are under discussion but remain low in volume. Upside is capped by sluggish global demand and competitive pressure from alternative origins.  

Market Outlook: Bearish

Butter prices showed modest strength through August, with spot values climbing into the EUR 7,100–7,350/MT FCA range. Cream remained elevated between EUR 7,900–8,100/MT FCA, supported by limited availability. Retail demand was stable, while foodservice remained mixed across the region. EU butter production in June was down –1.3% YoY, with stocks still –10.5% below last year and –12.2% below the 5-year average. This tight supply helped maintain price stability, despite cautious buying activity and patchy export demand.  

In early September, EU butter prices have slipped to EUR 6,550–7,000/MT FCA, with sellers from Germany and the Netherlands offering more aggressively. Cream values have softened to EUR 7,700–7,850/MT FCA, reflecting reduced buying urgency. While inventories remain tight, industrial and export interest has weakened, and foodservice volumes are under pressure.  

US butter prices remain elevated, up +5% MoM and +7% YoY, driven by strong domestic foodservice and holiday season preparations. In New Zealand, early season output improved, and exports are increasing, though NZ butter is facing pricing pressure due to FX volatility and GDT weakness.  

Market outlook: Slightly bearish

BMP prices strengthened marginally in August, trading between EUR 2,400–2,520/MT FCA. The market remained tight, with little surplus production due to butter output staying well below historical norms. Demand from Southeast Asia was subdued, and global trade flows were light. Availability, especially for premium brands, remained limited. The US supply was also tight, with more fat redirected to cheese. GDT BMP fell –6.1%, reflecting weak demand and aggressive seller positioning.  

As cream values begin to ease and fat markets soften, sellers are expected to become more active. However, limited production and low stocks in Europe may provide price support even if demand remains thin.  

Market outlook: Stable to slightly bullish

FCMP prices held steady in August between EUR 4,150–4,350/MT FCA across Europe. Danish output remained strong, while Irish and French volumes stayed flat YoY. Chocolate sector demand was underwhelming, and substitution from SMP+AMF stayed limited due to price parity. Buyers remained cautious, purchasing mainly spot volumes and showing little interest in forward contracts.  

As SMP and AMF prices ease further, substitution demand may start to emerge again. Spot activity has shifted toward the EUR 4,000–4,100/MT FCA range. The bakery and chocolate sectors remain stable but slow-moving, with limited urgency reported across key markets.  

Market outlook: Neutral

Prices for food-grade SWP recovered slightly in August, trading between EUR 1,020–1,120/MT FCA, supported by firmer demand and tighter EU availability. Q4 buying interest from Southeast Asia picked up modestly, though buyers pushed back on higher offers. US-origin products remained uncompetitive due to elevated freight and domestic pricing. Stocks remained stable, while WPC production continued to limit SWP availability. Eastern EU supply was thin, and feed-grade prices were slowly firming.  

Heading into September, food-grade prices have eased to EUR 980–1,050/MT FCA, depending on origin and quality. SEA appetite has slowed, especially following Malaysia’s 5% import tax. China’s buying remains minimal, and demand overall is still feed-led rather than food-led  

Market Outlook: Slightly bearish