European Cheddar Prices Hold Firm into the Second Quarter of the Year

European cheddar prices ended higher in June, tracking the tightness in dairy commodities. Prices of cheddar curd closed €107 up to finish the month at €5,661/mt. Mild cheddar also traded up €125 ending the month at €5,602/mt supported by signs of tightening supplies in the cash market, traders said and lower milk production.

Production of cheese from cow's milk in the EU-27 also ended weaker in March-production fell 5.6 YoY to 809,000 mt. Cumulative production for the first quarter of this year has also lagged. Q-1 total came in at 2.29 million mt down 57,000 mt.

From January to February, the daily average of cheese production in the EU-27 edged up somewhat marginally, but the pace was lost moving into the third month of the year. In March, the daily average of cheese production was according to CLAL data 26,000 mt, significantly lower than the average daily production in March 2021 of 27000 mt.

Milk production in Europe continues to be lower than year-ago levels. Initial estimates of milk collections in April in top producer countries Germany, France and Ireland are all short of collections in April 2021. Adding to that milk solids which industry sources say fall short of normal levels.

Amid lower milk production in the west, demand for cheese has picked up. Demand from The USA has also been robust providing additional support to prices. Cheese production now seems to be very profitable for manufacturers as they make use of limited milk supplies.

Also, EU, Oceania and US cheddar prices continue to drift from each other. Since May, the price differential between EU and Oceania prices has widened to about €1,388 while that between EU and US has also increased to €417.