Demand weakness pressures liquid skimmed milk prices

Skimmed milk benchmarks have dropped sharply, nearly 60% lower than they were a year ago. While raw milk supply remains high, demand for liquid milk is weakening both in the EU and internationally. Sales in Germany and France have contracted, while China has reduced imports of liquid skimmed milk. This report examines these dynamics in detail, outlining the forces that are currently shaping the EU skimmed milk market.According to DCA Market Intelligence, skimmed milk benchmarks reached € 12.50 per 100 kilo on September 16, a 28.6% decline from the previous month and a 58.3% decrease from the same period last year.Skimmed milk fetched higher prices in winter, to decline through the spring flush in April and May. While prices usually increase in late summer and early autumn, this year was marked by a divergence, with prices taking on a negative trend that remains. This price volatility across the year is underscored by an elevated coefficient of variation (17.8%).Skimmed milk prices are poorly correlated with skimmed milk powder (31.4% to 36.6%) and cream (28.6%), despite belonging to the same production stream. Skimmed milk prices are instead highly correlated with skimmed milk concentrate (87.3%) and spot milk prices (80% to 84.8%). This suggests that both whole and skimmed milk prices react similarly to market stimuli.Drinking milk availability fallsSkimmed milk production is partly registered by Eurostat in the drinking milk category, despite ignoring its fat content. Cumulative production reached 12.76 million tons as of July, a 2.06% decline compared to the previous year.Germany, France, Poland, and Italy are the main contributors to skimmed milk production in the region, accounting for 49.7% of the EU output.Production declined across all major producers, except for Italy, where cumulative output increased by 2.75% to 1.45 million tons through July. Meanwhile, cumulative output in Germany reached 2.27 million tons as of July, reflecting a notable decline of 3.45% in the EU’s largest producer of drinking milk.Higher raw milk availabilityMilk production in the EU totaled 12.45 million tons in July, reflecting a 0.48% increase over the previous year, according to Eurostat data. While production at its peak faced annual declines from main producers, it is recovering, rising from the relative stability observed in June (+0.09%). The increase accelerated in August, as data on weekly production indicate growth in Germany, France, the Netherlands, and Poland.Cumulative production reached 86.69 million tons as of July, a 0.63% decline compared to the previous year. Nonetheless, growth in previous weeks has been reported among major producers, which will offset cumulative production as data is reported.Internal EU tradeMost of the EU skimmed milk production is traded within its borders, given the logistical disadvantages of trading liquid milk overseas. Given its high-water content, transport costs are a limitation of the long-distance skimmed milk trade. Total internal exports* reached 713,168 tons in 2024, valued at €226.5 million. While volume remained stable (+0.2%) compared to the previous year, export value dropped by 11.5%. This reflected an 11.7% decline in the average export price to €318 per ton.The main exporters within the region include Germany (+9.1% to 166,198 tons), France (+188.6% to 249,866 tons), and the Netherlands (-70.8% to 35,671 tons). The high export volumes observed in France were driven by increased trade towards the Netherlands, likely driven by a decline in food service segment demand.Nonetheless, intra-EU skimmed milk trade was directed primarily to Italy (274,219 tons), Spain (115,645 tons), and Germany (73,213 tons).International tradeAccording to the Comext database, the EU bloc exported 81,638 tons of skimmed milk in 2024, valued at €52.9 million. This represented a decline of 31.8% in weight and 24.5% in value, compared to the previous year.Exports in Germany faced an annual reduction of 10.6% in quantity and 15.6% in value, reaching 47,271 tons and €29,15 million in 2024. This accounted for 57.9% of the exports and 55.1% of the export value.The EU’s export contraction was driven by lower shipments to its major markets. In China, imports from the EU declined by 17.9% in quantity and 21% in value. Meanwhile, the EU’s skimmed milk exports to the United Kingdom (UK) declined by 71% in quantity and 73% in value. Notably, export value declined both for China and the UK.Skimmed milk salesThe demand for skimmed milk was assessed through the sales volumes reported in the Comprod database. EU retail-oriented skimmed milk sales (packaged under 2 liters) totaled 2.4 million tons in 2024, a 1.17% increase over the previous year. Italy was one of the main drivers of this increase, with sales growing by 7.1% to 512,375 tons. France also increased by 1.64% to 112,425 tons.Meanwhile, Germany’s sales declined by 10.48% to 192,199 tons, considering its orientation towards business-to-business (B2B) and food service.B2B and food-service-oriented sales declined by 5.8% year-over-year to 2.71 million tons, primarily driven by sales contraction in Germany (-4.24% to 1.52 million tons), France (-17.5% to 536,700 tons), and Poland (-3.2% to 151,888 tons). Offsetting this trend, growth was observed in Italy (+41.8% to 210,181 tons) and the Netherlands (+2.65% to 34,939 tons).Production demandSkimmed milk demand was also addressed through the production of skimmed milk powder (SMP) and fermented milk. EU SMP production reached 1.38 million tons in 2024, reflecting a decline of 0.79% over the previous year. This decline was primarily driven by contractions in Germany (-5.29%) and Ireland (-15.6%). Meanwhile, growth in France (+4.98%), Poland (+5.14%), and the Netherlands (+17.49%) offset the decline. Italy did not report SMP production figures.Cumulative production in 2025 totaled 886,400 tons as of July, a 0.44% increase over the previous year. Contrasting with 2024, growth was reported in Germany (+3.93%) and Ireland (+32.01%). Meanwhile, output declines were observed in France (-0.87%), the Netherlands (-1.69%), and Poland (-6.99%).Meanwhile, fermented milk production increased by 7.75% over the previous year, reaching 7.8 million tons. While growth was reported in Germany (+4.06%), France (1.45%), the Netherlands (+3.31%), and Poland (+9.06%), declines were observed in Italy (-6.29%). Ireland did not report.Growth slowed down in 2025, with cumulative output increasing slightly by 0.66% year-over-year to 4.62 million tons through July. Notably, the only decline in major producers was observed in the Netherlands (-5.04%), while growth was observed in France (+0.63%), Germany (+2.41%), Italy (+4.33%), and Poland (+6.08%).Chinese demand plummetsMeanwhile, the international demand for skimmed milk in the main destination for liquid skimmed milk is declining. China’s imports of skimmed milk declined by 22% compared to the previous year to 57,552 tons in 2024.The EU import share increased from 67.5% to 68.1% during the period. This suggests that the contraction in EU skimmed milk exports derives from an overall contraction in the Chinese demand, rather than a loss of competitiveness in the liquid segment.This trend was even more intense for SMP imports, declining by 33.5% compared to the previous year to 225,035 tons in 2024. The EU’s import share also declined from 12% to 18%.The overall decline in China’s skimmed milk import contraction reflects both the increased self-sufficiency of the country and a rebalancing of consumer preferences. As the population ages, dairy consumption starts to prioritize mature, value-added products, gradually moving away from traditional milk and baby formula imports.Discussion and conclusionsSkimmed milk benchmarks have weakened across 2025, showing a significant difference over the usual seasonal recovery in late summer and early autumn. This divergence was driven by an abundant raw milk availability and softer demand within the EU and international markets. While volatility remains elevated, the current trend suggests that supply continues to outweigh demand.On the supply side, raw milk collections recovered in the summer months, reinforcing availability across the region and weighing on spot milk prices. Being highly correlated, skimmed milk prices also reflected the pressure faced by raw milk.Demand conditions also weakened. Retail and B2B sales of skimmed milk in the EU fell, with Germany and France reporting the largest drops. Declines in consumption trends are underlined by structural changes in dietary habits, such as processors' shift from low-margin liquid milk in France. Meanwhile, plant-based alternatives continue to gain share, supported by health, environmental, and ethical perceptions among consumers.Industrial demand was more resilient but insufficient to absorb the surplus. SMP output has remained stable, and fermented dairy production expanded, although at a lower pace than the previous year. These dynamics underpin the EU dairy industry’s shift towards value-added processed products rather than plain liquid milk.The international demand for liquid skimmed milk is significantly lower, given the cost of transporting products with a high-water content through long distances, particularly with elevated energy costs in recent years. Nonetheless, extra-EU trade has also faced challenges. China, the largest external destination, reduced import volumes in 2024. This reflected both China’s growing domestic self-sufficiency and shift in consumer preferences towards higher-value dairy products, which is already affecting exports to the Asian country.In conclusion, the EU skimmed milk market is currently facing falling prices, abundant milk supply, and declining demand. Structural pressures within and outside the EU bloc suggest that liquid skimmed milk is increasingly more focused on a niche segment and on the development of value-added segments. In the short term, however, the stability in skimmed milk prices observed in the past week could give way to further corrections, especially considering higher projections of output in the EU, the US, and Oceania.Footnotes:*: Liquid skim milk trade is reported through the Harmonized System code 040110 - Milk and cream of a fat content by weight of