EU Cheddar market rebalances amid ample supply and global competition

After a notable price correction, DCA Cheddar benchmarks have stabilized, but the recovery remains fragile and uneven compared to other cheeses. Beneath the surface, strong milk availability and expanding production in Ireland, the UK, and Eastern Europe continue to weigh on the market, even as exports grow. At the same time, trade flows reveal a quiet but significant shift, with EU buyers increasingly substituting UK-origin Cheddar in favor of New Zealand and US products.From a stark price correction in the last market report in October, DCA Market Intelligence’s Cheddar benchmarks appear more stable, with positive developments in the last week. DCA benchmarks closed at €3,215 per ton for Curd (-1.1% month-on-month) and €3,250 per ton for Mild (-2.1% MoM) on February 5. These movements consolidated a prolonged price contraction, resulting in annual declines of 32.5% for Curd and 33.9% for Mild.Cheddar pricing remains highly integrated within the broader EU cheese complex, exhibiting a very strong correlation with benchmarks such as Gouda (98.2%–98.4%). In this context, Cheddar entered 2025 on a firm footing, peaking in mid-March before entering a gradual downward correction through spring and early summer. The adjustment intensified in August, triggering a pronounced decline that persisted until late October. Over ten weeks, prices fell by €985 per ton for Curd and €975 per ton for Mild. After stabilizing in subsequent weeks, a renewed correction at the end of January pushed Cheddar prices to their lowest level since 2021. Benchmarks recovered slightly the following week.Price volatility within the Cheddar complex, measured through coefficients of variation, ranged between 14.8% and 15.2% over the past year. This was broadly in line with other EU cheese benchmarks, including Gouda, which recorded a coefficient of variation of 15.7% over the same period. While Gouda prices have shown signs of recovery in recent weeks, Cheddar pricing has shown less resilience.Downward price pressure was also evident across other major Cheddar-producing regions. In the United States (US), Cheddar prices declined by 3.32% month-on-month and by 28.6% year-on-year to $3,058 per ton as of January 20. Despite the sharp annual decline, US prices proved comparatively more resilient than in the EU, as reflected by a lower decline and a lower coefficient of variation (8.5%). In New Zealand, Cheddar prices decreased by 1.12% month-on-month and 5.2% year-on-year to $4,594 per ton, while displaying the lowest volatility among the main producing regions, with a coefficient of variation of 7.1%.EU Cheddar prices remain strongly correlated with the US market (73% to 75%), suggesting comparable reactions to global market signals. In turn, correlation with New Zealand prices is considerably weaker (31% to 32%), reflecting both the structural and seasonal differences between the two hemispheres.Production expansion in European providersWithin Europe, Cheddar production is primarily concentrated in Ireland and the United Kingdom (UK), which together account for the bulk of regional output and trade. Smaller volumes are produced elsewhere in the EU, including Belgium, Estonia, Sweden, and Romania. In addition, Poland has gradually increased its relevance in the Cheddar market, with market participants frequently citing growing Polish availability as a contributing factor to recent price pressure.According to Defra, Cheddar production in the UK reached 355,600 tons in 2025, representing a 2.9% increase compared to the previous year. Elevated milk availability supported this expansion, with UK milk production rising by 5% year-on-year and milk solids increasing by 6.2% over the same period.In Ireland, although Cheddar or cheese production data are not available, milk production rose sharply. Eurostat data indicate that Irish milk output increased by 7.72% year-on-year to 9.34 million tons in 2025. When combined with expanding export volumes both within and outside the EU, these indicators strongly suggest a notable increase in Cheddar production.In Poland, year-to-date cow cheese production expanded by 4.3% year-on-year to 998,980 tons as of November, according to Eurostat. While Cheddar-specific volumes are not reported, the broader increase in cheese output points to an increase in Cheddar availability, given its growing presence in Polish production portfolios. Milk supply supported growth in cheese, with Polish milk production increasing by 3.05% year-on-year to 13.8 million tons in 2025.Internal trade contracts, despite Ireland’s expansionIntra-EU trade flows further reflect ample Cheddar availability. According to Comext data, internal EU trade declined by 4.2% year-on-year to 179,994 tons year-to-date as of October. While shipments from Ireland increased to 67,025 tons (+11.3% YoY), volumes supplied by the Netherlands fell to 35,709 tons (-15.8%). That said, the Netherlands is not a major producer of Cheddar but rather a nexus for import and re-export.From a demand perspective, imports contracted notably in key consuming markets, including Germany (-12.7%), Spain (-18.1%), and Italy (-6.4%). These declines were partially offset by increased imports into the Netherlands (+8.1%) and France (+18.9%). Overall, weaker intra-EU trade flows point to subdued demand conditions amid strong regional supply.Extra-EU trade growsIn contrast, extra-EU exports increased by 5.9% year-on-year to 102,998 tons as of November. This growth was driven almost entirely by Ireland, whose exports rose by 10.2% year-on-year to 93,919 tons. By comparison, exports from the Netherlands declined by 9.7%, albeit from a significantly smaller base.The UK remained the dominant destination for EU Cheddar exports, absorbing 53,755 tons from Ireland as of November, up 18.3% year-on-year. Additional growth was observed in shipments to the US (+73.4%) and Libya (+73.9%). These gains were partially offset by reduced exports to Algeria (-15.5%), Japan (-34.4%), and Saudi Arabia (-19.9%). Overall, the UK continued to dominate both as the main destination for EU exports and as the primary source of EU imports.A notable shift emerged on the import side. EU Cheddar imports increased marginally by 1.6% year-on-year to 61,299 tons as of November. However, imports sourced from the UK declined by 8.1% to 54,809 tons. This contraction was more than offset by sharply higher volumes from New Zealand (+848.3%) and the US (+7,416%). The substitution of UK-origin products was also mirrored in external markets, where EU-sourced imports into Algeria declined while US-origin shipments increased, pointing to growing competitive pressure from non-EU suppliers.Discussion & conclusionsAt the start of the year, the Cheddar benchmarks remain significantly below the previous year, in the aftermath of a prolonged price correction. While prices have stabilized more recently, Cheddar has displayed a noticeably weaker recovery than other benchmark cheeses, particularly Gouda. According to market participants, this reflects both tighter Gouda availability toward the end of the year and robust Cheddar supply, supported by sustained production growth in the UK and Eastern Europe.Overall, market indicators continue to point to ample Cheddar availability across Europe. Strong milk production growth in Ireland and the UK translated into higher output and expanding trade flows, weighing on prices despite growing extra-EU exports. At the same time, Poland’s role as a secondary but expanding supplier has added incremental volumes to the market, reinforcing supply-side pressure. Despite higher UK production, EU imports sourced from the UK declined, while volumes from New Zealand and the United States increased sharply. This substitution was likely influenced by a combination of post-Brexit trade frictions (transaction costs), the implementation of the free-trade agreement between New Zealand and the EU, and unusually strong US export competitiveness in 2025 amid ample milk supplies. Algeria showed a similar pattern, where rising US imports increased amid falling EU-sourced volumes, reflecting that competition from third-country suppliers is increasingly shaping trade flows both within and beyond the EU. In practical terms, US and New Zealand Cheddar can substitute for European-origin product primarily in industrial applications, suggesting that these substitutions are taking place primarily within the food processing and foodservice segments rather than in retail, where origin and specification requirements are stricter.In contrast, EU export growth was largely driven by increased shipments to the UK, offsetting weaker demand in parts of Asia and the Middle East. As a result, competition from the US and New Zealand is becoming more visible both within the EU market and in key export destinations.Early signals in 2026 point to a modest price recovery, driven primarily by sentiment in futures and spot dairy markets. While these gains have supported prices across several cheese categories, underlying production fundamentals in the EU remain broadly unchanged. With milk availability still ample and milk prices declining, any sustained rebalancing of the Cheddar market will depend on the duration of price pressure and its eventual impact on milk supply. ReferencesUK-EU Summit: Joint Statement; Common Understanding, and Security and Defence Partnerships New Zealand-European Union Free Trade Agreement Text and Associated DocumentsFAO - Codex Standard for Cheddar