1. Weekly News

Global

Rabobank Report Highlights Rising European Dairy Prices and Future Consolidation

Rabobank’s annual Global Dairy Top 20 report reveals a stark divergence in global dairy market performance, with European milk prices surging 15% year-on-year (YoY) through Jul-25. This price boom in Europe, which benefits companies with a strong presence in the region, stands in sharp contrast to other major markets, notably China, where farmgate prices declined by 12% over the same period. Furthermore, the report’s annual Global Dairy Top 20 ranking shows French giant Lactalis solidifying its number one position, based on an estimated USD 31.9 billion in revenue, a lead widened by its aggressive acquisition-led growth strategy. Nestlé and Dairy Farmers of America were ranked second and third place with USD 23.9 billion and USD 23.0 billion, respectively. Looking ahead, Rabobank forecasts a significant shake-up of these rankings in 2026, anticipating that an increase in merger and acquisition (M&A) activity will be the primary driver of change. This trend underscores that consolidation will remain a dominant theme as global dairy companies navigate a complex international market.

China

Mengniu Dairy's H1-2025 Profits Fall Amid Oversupply and Weak Demand in China

Chinese dairy giant Mengniu Dairy has reported a significant decline in its financial performance for the first half of 2025 (H1-2025), with revenues falling 6.9% to USD 5.83 billion (CNY 41.57 billion) and profits dropping by 16.2% to USD 290 million (CNY 2.05 billion). The company attributes the downturn to a persistent imbalance in China's domestic dairy market, caused by a combination of an oversupply of raw milk and a slower-than-expected recovery in consumer demand. This market pressure was most evident in its largest division, liquid milk, which experienced an 11.2% sales decline. This performance continues a downward trend from 2024. Despite the challenging conditions, Mengniu remains optimistic about the long-term outlook, citing recent government measures to stimulate demand. The company is responding by investing in innovation and distribution, with a focus on expanding its presence in lower-tier cities and high-growth channels like convenience stores and e-commerce to navigate the current market headwinds.

France

France Sees Sharp Decline in Lumpy Skin Disease Outbreak

France's agriculture ministry has reported a sharp decline in Lumpy Skin Disease (LSD) outbreaks within its cattle herd, attributing the success to a widespread and rapid vaccination campaign. After peaking at approximately ten new outbreaks per week in Jul-25 and early Aug-25, the rate has fallen significantly, with no new cases reported since August 22. The viral disease, which reduces milk production but does not affect humans, prompted a swift response that has seen over 220,000 animals vaccinated in the affected eastern regions, accounting for more than 90% of cattle in the zones around the outbreaks. Despite this successful domestic containment, the outbreaks have had significant international trade repercussions. French dairy producers confirmed that the United Kingdom (UK) and other countries have implemented bans on imports of French raw milk cheese, creating immediate economic challenges for a key, high-value segment of the country's dairy export market while the situation is being resolved.

Netherlands

Forecasted Closure of 3-4 Dutch Dairies by 2030 Amid Shrinking Milk Supply

A new ABN Amro report forecasts that three to four dairy processing facilities in the Netherlands will be forced to close by 2030 due to emerging market overcapacity. This situation is being driven by a projected 8% decline in the national dairy herd, which will lead to a significantly smaller domestic milk pool for processors. As a result, the bank predicts a fierce battle for milk, where processors will compete intensely for farmer supply by offering higher prices and attractive sustainability premiums. Processors who fail to secure sufficient milk volumes will face underutilization of their capital-intensive factories, rendering them unprofitable and leading to eventual closures. To mitigate this risk, Dutch companies are reportedly looking to source milk from border regions in Germany and Belgium and are exploring potential international mergers to ensure a stable supply and maintain operational capacity.

United Kingdom

UK Clarifies Import Pathway for Thermised Dairy from France and Italy

The UK government has issued updated guidance clarifying the import conditions for certain milk products from France and Italy following recent outbreaks of Lumpy Skin Disease (LSD). While the suspension of raw bovine milk and dairy products—defined as those not heated above 40°C—remains firmly in effect, the new guidance provides a specific import pathway for products that have undergone a heat treatment lower than pasteurisation, such as thermisation. This clarification allows for the potential resumption of trade in certain value-added products, like some specialty cheeses, that were previously affected by the restrictions. To utilize this pathway, importers must be imported under General Authorisation IMP/GEN/2024/01 using certificate GBHC416, and provide supporting documentation, such as a manufacturing certificate, to prove the milk was heat-treated to a temperature above 40°C. This creates a conditional, but viable, route to the UK market for a segment of previously restricted French and Italian dairy exports.

2. Weekly Pricing

Weekly Powdered Milk Pricing Important Exporters (USD/kg)

Yearly Change in Powdered Milk Pricing Important Exporters (W35 2024 to W35 2025) 

Germany

In Germany, the price of Skimmed Milk Powder (SMP) was USD 2.82 per kilogram (kg) in W35, an increase of 0.36% week-on-week (WoW) and 1.44% month-on-month (MoM), but down 1.40% YoY. The market is showing signs of firming after the summer holiday period, with the positive WoW and MoM movements reflecting a tightening European milk supply post-spring flush. This underlying strength is consistent with recent reports indicating a 15% YoY increase in European farmgate milk prices through Jul-25. However, the negative YoY price is a significant development. It suggests that despite a 2.4% decline in German raw milk deliveries during the first seven months of 2025, processors have maintained ample SMP supply (+4.3%) during the same period. This, combined with weak demand from key export markets like China—where major producers are reporting an oversupply of local milk—is creating a bearish headwind, pulling German SMP prices slightly below the levels seen at the same time last year.

Belgium

In Belgium, the price of SMP rose to USD 3.23/kg in W35, a sharp increase of 4.87% WoW and 2.54% MoM, contributing to a significant 15.36% YoY rise. The Belgian market has rebounded aggressively, with the sharp WoW increase signaling a definitive end to the summer holiday lull as buyers return to the market. The strong MoM and exceptional YoY price hikes are driven by severe domestic supply constraints, with raw milk deliveries down 3.3% and SMP production falling by a substantial 7.9% in the first seven months of the year. This price strength directly reflects the broader European trend highlighted in a recent Rabobank report, which noted a 15% YoY increase in the continent's milk prices through July. Belgium's significant production shortfall places it at the forefront of this European price rally, with the market now correcting sharply upwards as post-holiday demand returns to a supply-constrained environment.

Netherlands

In the Netherlands, the price of SMP declined to USD 2.73/kg in W35, a slight decrease of 0.73% WoW, while remaining flat MoM at 0.00% and down 2.50% YoY. The Dutch market is showing lackluster momentum, with the WoW dip and flat MoM performance suggesting that the end of the summer holiday period has not brought a strong return of demand. The negative YoY performance is particularly notable, as it diverges from the broader European trend of strong milk price inflation. This price weakness can be attributed to a combination of soft international demand from key markets such as China and intense domestic competition. With a shrinking domestic milk pool (-1.3% year-to-date), Dutch processors are in a fierce battle for milk, which may be leading them to price SMP more competitively to maintain factory throughput, overriding the inflationary impact of a slight decline in SMP production (-0.6% year-to-date).

France

In France, the price of SMP was USD 2.75/kg in W35, a decrease of 1.43% WoW and 0.36% MoM, leaving the price nearly flat YoY at +0.36%. This marks a clear reversal from the firming trend seen in previous weeks. The downturn is likely linked to the market disruption following the recent Lumpy Skin Disease (LSD) outbreak. Although French authorities have successfully contained the disease, the resulting import bans on high-value products such as raw milk cheese by the UK and other partners have created significant short-term market uncertainty and logistical challenges. This bearish sentiment is currently overshadowing the underlying fundamentals of a tighter domestic supply (down 0.6% YTD), effectively erasing the price momentum seen over the past month and eroding nearly all of the YoY gains.

Poland

In Poland, the price of SMP was USD 2.86/kg in W35, stable at 0.00% WoW. This contributes to a 2.39% decline MoM but marks a significant reversal to a positive 3.25% YoY comparison. The Polish market shows clear signs of stabilization, with the flat WoW performance halting the sharp bearish trend seen in previous weeks. The negative MoM figure still reflects the impact of those earlier price drops. The most significant development is the flip to a strong positive YoY comparison. This suggests that after a period of correction, the market has found a floor that is higher than last year’s. While Poland’s increased raw milk supply (up 1.1% YTD) differentiates it from other EU members, it is not immune to the continent-wide inflationary pressures that have established a higher price floor across the European dairy sector.

3. Actionable Recommendations

Secure Future Milk Supply Through Long-Term Contracts and Cross-Border Sourcing

The ABN Amro forecast of a shrinking Dutch milk pool and subsequent plant closures presents a clear and present threat to processor viability. To avoid becoming a casualty of the intensifying battle for milk, processors must act decisively to secure their long-term raw material base. This involves moving beyond competing on spot prices and focusing on developing robust, long-term contracts with domestic farmer suppliers. Offering attractive, multi-year agreements, coupled with meaningful sustainability and biodiversity premiums, can build loyalty and guarantee supply. Furthermore, as suggested by the report, processors should immediately establish and expand cross-border sourcing networks in nearby Germany and Belgium to diversify their supply pool and mitigate the risk of domestic shortfalls. Proactive supply chain management will be the key differentiator for survival in the coming years.

Adapt to New UK Import Rules to Expedite Cheese Market Re-entry

The trade disruption following the LSD outbreak highlights the vulnerability of high-value French dairy exports to sanitary restrictions. French producers of specialty cheeses, particularly those affected by the UK's initial ban, must respond with agility to the updated UK guidance. The clarification provides a specific pathway for products made from thermised milk (heated above 40°C). Exporters should immediately conduct a product portfolio review to identify which cheeses meet this standard or could be adapted to do so. They must then proactively communicate with their UK importers, providing the necessary manufacturing certificates and ensuring compliance with the specified health certificate (GBHC416) to re-establish trade as quickly as possible. This rapid adaptation is crucial for recovering lost sales and reassuring international partners of supply chain reliability.

Re-evaluate China Strategy Amid Domestic Oversupply

A recent report from Rabobank and Mengniu Dairy’s financial results send a clear signal: China’s domestic market is suffering from a raw milk surplus and weak consumer demand, making it an unfavorable destination for bulk EU dairy commodities. Continuing to push standard products into this market will likely result in low prices and thin margins. EU exporters and trade bodies should strategically pivot their China focus away from volume and towards high-value, specialized ingredients where European producers hold a technological or quality advantage. This includes infant formula ingredients, specialized whey proteins, and unique cheese cultures that are not easily replicated. By targeting niche, high-margin segments, exporters can insulate themselves from the price pressures of China's commodity market. This approach requires investment in technical sales and marketing to demonstrate the superior value proposition of European ingredients to Chinese food manufacturers.

Sources: Tridge, UK Government, Boerenbusiness, Reuters, Agriland, Just Food, Rabobank, ABN Amro