Dutch farmgate milk price makes unexpected U-turn

FrieslandCampina has made waves in the dairy market by firmly increasing the milk price for April. In light of the market, a rise was not unlikely, but almost no one expected such a big step. The Amersfoort dairy cooperative is thereby setting the tone for other processors heading into the seasonal peak. After the Guaranteed Price found a floor in March following a historically rapid decline, the upward trend has already started again. After three months in the 30s, the Guaranteed Price returns to the 40s in April. The turnaround comes faster than was thought earlier. The dairy market offers room for higher milk prices. Based on the valorization of skimmed milk powder and butter, the raw material value of milk had risen to €45 per 100 kilos by mid March, according to data from DCA Market Intelligence. Cheese and whey are performing at least as well. In the second half of 2025, however, the farmgate prices were above the raw material value. Factories often take longer to pass on a shift in the milk price after a period of negative margins. FrieslandCampina, however, is not wasting any time on the recovery of the dairy market and is raising the Guaranteed Price sharply right away. In doing so, the company is implicitly putting pressure on the reference companies on which the Guaranteed Price is based. In February, FrieslandCampina management still said said when presenting the annual results that milk prices might only improve in the second half of 2026. Less than a month and a half later, that assessment appears too cautious. The dairy market has gained ground in a short time. Powder market sets the tone Butter and cheese prices have risen towards Easter, despite persistently high milk supplies. Cheese is benefiting from good sales, causing stocks to tighten. But the real support comes from an unexpected angle. Unlike previous rallies, it is not milk fat but protein driving sentiment. The price of whey powder has risen by 35% since the turn of the year to €1,500 per ton. This is the highest level since 2022. Skimmed milk powder has also climbed to the highest level in more than three years. High-quality WPCs are also commanding high prices, supported by strong consumer demand. The causes of the recovery in the powder market are diffuse. Due to the cereulide scandal in baby food earlier this year, a lot of milk powder was destroyed. Demand, however, continues, meaning extra product is needed. The war in Iran is creating upward momentum, because skimmed milk powder historically benefits from higher oil prices. In the region, food, including milk powder, is being stockpiled by consumers. At the same time, European milk powder towers are running at full capacity due to the high milk supply. Processing capacity cannot fully absorb the supply, partly because of factory closures in previous years. Prices of skimmed milk concentrate on the spot market are therefore under pressure. The same applies to spot milk prices. Spot milk in the gutter At €13 per 100 kilos, spot milk prices fit three times into payout prices, while the seasonal peak still has to come. In the coming weeks, processing days will also be lost due to Easter and other public holidays, which may widen the gap further. A plentiful milk supply is currently no obstacle to positive market sentiment and higher prices. With the substantial increase in the Guaranteed Price, FrieslandCampina is not providing any incentive to limit milk production. Apparently there is confidence in the coming months, although the dairy market remains volatile. Whether other processors will also implement large increases remains to be seen. Uncertainty remains The question is how the dairy market will develop in the coming months. Will the positive sentiment in the powder market hold up amid geopolitical tensions? And how will butter and cheese prices react to the seasonal peak in milk in Europe, when Ireland is also producing for export again? In 2022 and 2024, milk prices also rose in spring, only to increase sharply afterward. That this will happen again in 2026 is not a given. There are too many uncertainties surrounding the market for that. The ample milk supply can also put pressure on the market again at a later stage.