Q2 2025 EU dairy product supplies build up

Key trends

• Production and imports growth boost butter supplies
• Reduced exports of cheese boost inventories
• Production growth and lower exports increase stocks of milk powders

EU Milk deliveries increased marginally by 0.06% in the second quarter, year-on-year, supporting the production of dairy products. This, coupled with lower exports added to the available supplies of cheese and milk powders. For butter, exports remained strong, but higher production and imports boosted supplies compared to the previous year.

Total dairy exports on the continent declined by 2.7% in the second quarter year-on-year. The biggest decline in export volumes was reported in WMP followed by cheese. Demand remained subdued from China, MENA and some countries in Asia. The higher price of WMP compared to the global market weighed on exports. Exports of butter increased during the period following good demand from the United States (ahead of Trump’s tariffs) and the United Kingdom.

Butter stocks continued to grow

The increase in available butter supplies was mostly driven by higher production and imports to the EU, which negated higher exports during the period. Production volumes increased following good availability of milk in the domestic market in key regions. Paired with this, good demand in the domestic market ahead of the holiday season signalled higher production.

Cheese supplies trend up

Cheese stocks built up in the second quarter year-on-year after a decline at the beginning of the year. Although production and imports picked up during the period, the decline in exports due to comparatively high prices boosted supplies. Export demand declined mostly from MENA countries, United States and China. 

Supplies of powders grew

Availability of skimmed milk powder (SMP) supplies increased by 5.5% year-on-year in Q2 2025. Production increased by 5.5% whilst imports declined 1.7% during the period. Exports were higher by 5% year-on-year driven by Asia (Vietnam, Philippines, Malaysia, Thailand, Indonesia) and Saudi Arabia in the Middle East.

Whole milk powder (WMP) production increased only marginally year-on-year with processors utilising the extra milk for the production of cheese and butter. Exports saw significant decline following strengthening of the Euro and poor price competitiveness in global markets. Exports declined to MENA countries and Asia. Available supplies increased by 20.5% following those lower exports and slight increase in production.

According to the latest short-term outlook, the European Commission expects milk deliveries to remain stable in 2025 (+0.15% year-on-year without adjusting for the leap year in 2024). The decline in the dairy herd size will be balanced by the increase in milk yields (+1.2%) in combination with improving milk fat (+0.2%) and protein (+0.1%) content. We are now starting to see some price corrections on the European market which have diverged from the rest of the world in price terms.  This could begin to apply some margin pressure looking forwards.  However, this will be subject to instabilities in the overall geopolitical situation in the global market.

Coupled with this, will be the situation of disease scenario on the continent, which battered milk production in 2024 and early this year. Whilst some diseases have eased, others have appeared. Climate change and environmental policies especially nitrate derogation policy in Ireland will also be key factors to watch out for.

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