How milk prices find a bottom in an oversupplied market

FrieslandCampina keeps the Guarantee price for March unchanged at €39 per 100 kilos. DOC Kaas also unexpectedly did not implement any further reductions for February. Has a bottom been established under the milk price or is that premature? Despite the initial stabilizing milk prices, the physical free market looks undeniably ample, if not oversupplied. This is also evident from the DCA benchmark for for raw milk, which fell again by €5 last week to around €15. Leading up to the seasonal peak in May, there is an unprecedented amount of milk in Northwest Europe. Higher slaughter numbers currently do little to change this. Good profit figures At the same time, the picture is not entirely bleak. Those who thought that FrieslandCampina and Arla would have given up the profits from the first six months in the second half of 2025 are mistaken. Both cooperatives managed to deliver strong annual results despite the price crash. The explanation lies in their portfolio. The ingredient divisions with high-yielding WPCs and MPCs, combined with more stable branded dairy products, more than compensated for the losses in bulk dairy. Baby milk powder also yields good returns. Companies with a broad and strong portfolio appear to be less vulnerable to losses in the bulk market, as it turns out. Pressure on reference companies Is that also the reason FrieslandCampina keeps the Guarantee price stable? In theory, the cooperative follows other reference companies in its methodology, but in practice, the Guarantee price often sets trends. By not further lowering it now, implicit pressure is placed on other processors to do the same. In that sense, it's a strategic move that can positively influence market sentiment. In the dairy trade, the direction of the Guarantee price is indeed quite decisive. FrieslandCampina talks about a 'sudden turnaround' in the market, without elaborating further. This refers to rising prices of processed cheese, butter, milk, and whey powder in recent weeks. The valorization of milk based on butter and skim milk powder is again around €40. Internationally, the sentiment also looks more favorable. The Global Dairy Trade shows rising quotations, and Fonterra raised its milk price forecast for the current season. Fundamentals are still lackingBut hard European fundamentals for significant market recovery are still lacking. The supply figures in the Netherlands, Germany, and France are clearly above those of last year at the beginning of 2026. Factories are operating at full capacity, as both FrieslandCampina and Arla have confirmed aloud. In Ireland, the milk season is about to start soon, and additional product will be available there as well. Moreover, butter stocks in Europe are still substantial. The cheese stocks are relatively limited with young delivery times, but there is still a lot of product in the pipeline due to the ample and increasing supply. Overall, the dairy market seems to resemble a patient who has transitioned from a cast to a walking boot. In other words: there is stabilization, but not yet a full recovery. A better balance between supply and demand is still missing. Below 40 euros is not cost-covering For dairy farmers, stabilization at least means that the situation will not deteriorate further. After a good year, many businesses still have buffers available. At the same time, the expensive months of the year are again approaching. The manure needs to be removed, and seed and fertilizers must be purchased. The blue envelope is also on its way. This takes a bite out of the liquidity. From this perspective, a faster than expected stabilization of the milk price is favorable, as it prevents worse outcomes. At the same time, price increases are not yet in sight. And a milk price below €40 per 100 kilos is no longer cost-covering for many companies today.