EU cheese prices were in freefall during the week ending 12th January. For reference, the MBP for Mozzarella EXW EU [Mintec Code: ED27] was last assessed on 12th January at EUR 3,000/mt, down by 14% week-on-week (w-o-w).
Fundamentals, particularly demand, fuelled bearish sentiment and prices went down faster than expected. There was a combination of scarce demand together with high supply. According to market participants and the earliest milk output estimates across the EU, December milk production was higher than expected. Furthermore, the Agriculture and Horticulture Development Board (AHDB) estimates December milk production to total 1,033 million litres for Great Britain. This is an increase of 2.2% (+22.5 million litres) from volumes recorded in December 2021, but 0.3% (2.6 million litres) below the five-year average of December production. This milk surplus added to the already high cheese stocks held by producers. One source indicated, “there is too much old cheese available in the market. We can see gouda with eight weeks, which has to move quickly if it is to be sold for slicing.”
In terms of demand, January is seasonally low as volumes purchased for Christmas linger during the month. Additionally, international demand is muted, awaiting further price declines. Although China has lifted COVID-19 restrictions, Chinese buyers are not active in the market.
The question now is where are the bottom floor prices. One contact stated, “it’s expected that gouda and edam prices will reach bottom floor prices of EUR 2,800/mt in February.” As with mozzarella prices, yellow cheese prices dropped sharply during the week, the Mintec Benchmark Prices (MBP) for Gouda EXW Europe [Mintec Code: J114] was last assessed on 12th January at EUR 3,100/mt, down EUR 550/mt during the week. Meanwhile, the MBP for Edam EXW Europe [Mintec Code: J113] stood at EUR 3,100, down 15% w-o-w.