EU cream market contracts despite rising milk supply

The EU cream market contracted in 2025 despite a notable increase in milk production. Prices declined sharply and remained volatile, as cream lost competitiveness to butter in milk fat allocation. At the same time, weaker demand across both internal EU and export markets, combined with rising imports, added further pressure, particularly in industrial segments.1. Benchmark OverviewDCA cream benchmarks closed at €3,680 per ton on April 16, declining by 21.5% compared with the previous month and by 58.8% year on year. Although weekly fluctuations can indicate some recovery in early 2026, pricing remains defined by a strong price baseline from 2025. Cream prices entered 2025 on a relatively stable footing and remained broadly unchanged until week 34. Afterwards, prices followed a consistent downward trend, which accelerated from week 46 onward.The high fluctuation in cream pricing resulted in an elevated volatility over the year, with a coefficient of variation of 0.31. This underscores cream’s sensitivity to changes in milk availability compared with storable dairy products.2. Cream loses competitiveness compared to butterFrom a pricing perspective, cream lost competitiveness compared to butter. The theoretical value of milk fat in butter remained above cream prices throughout most of the year, with the gap widening notably towards December. As of mid-April, the difference stood at €1,015 per ton, reinforcing butter’s relative competitiveness. Cream prices also declined more sharply than butter prices during 2025, falling by 58.8% year on year compared with a 48.7% decline for butter.At the same time, cream prices observed a higher volatility, reflecting a stronger sensitivity to changes in milk availability. In contrast to butter, cream is a fresh product with limited storage possibilities, which results in faster price adjustments during periods of supply expansion. This reduced the relative attractiveness of cream production at a moment of increased milk supply in the region.3. Milk production growth did not translate into cream availabilityEU milk production increased by 1.6% year on year to 146.82 million tons in 2025 and expanded further in early 2026, rising by 5.1% compared with the previous year. Yet, this increase did not result in higher cream availability. Production data of cream intended for direct consumption indicates a decline of 2% in 2025, with further contractions observed at the start of 2026. Intra-EU trade also declined by 2.6%, suggesting an overall reduction in cream supply.These developments suggest that the contraction in cream production was driven by milk allocation decisions, rather than constraints in raw milk availability. Considering that cream prices declined more than butter prices, the relative valuation of milk fat increasingly favored butter production. Additionally, butter’s longer shelf life allows processors to manage periods of elevated milk supply more effectively. As a result, milk fat was increasingly taken away from cream production, despite a higher milk output.4. Demand weakened across both internal and export marketsCream demand weakened across both intra-EU and extra-EU markets in 2025. Internal trade declined by 2.6%, with a more pronounced contraction in the retail (-7%), but also contracting in the industrial segment (-1.6%). This indicates reduced movement of cream products within the EU, which remains larger than the international market.At the same time, extra-EU exports declined by 16.6%, reflecting weaker demand in key destination markets. The contraction was largely driven by lower shipments to China (-32.5%), which remains the most important export destination for EU cream, particularly in industrial applications. This decline coincided with increased domestic dairy production and rising exports from China, suggesting reduced reliance on imported cream. Additional declines in exports to the United Kingdom (-30.6%) and South Korea (-6%) further contributed to the overall contraction.In parallel, EU imports increased significantly by 113.4%, both in retail and industrial applications, indicating that weaker demand conditions coincided with rising competitive pressure from external suppliers in price-sensitive segments.5. Market segmentation between retail and industrial cream intensifiedMarket developments in 2025 highlight a growing divergence between retail and industrial cream segments. Intra-EU trade data shows that retail-packaged cream declined by 7% year on year, while bulk cream for industrial use contracted more moderately by 1.6%. This suggests that demand conditions in consumer-oriented markets faced a stronger adjustment.Pricing dynamics followed a similar pattern. Export prices increased in the retail segment (+11.5%), while prices declined in the industrial segment (-6.6%), indicating stronger value retention in consumer-oriented products and greater price pressure in industrial applications. At the same time, the sharp increase in bulk-packaged EU cream imports underlines an increased competition in the industrial segment.As a result, the cream market is becoming more segmented, with industrial cream increasingly exposed to international price competition.6. Market mechanisms and interactionsOn the supply side, cream availability in the EU declined despite a notable increase in milk production, resulting more from processors’ allocation decisions than from milk production levels. The relative valuation of milk fat increasingly favored butter production, together with the logistical and economic advantages of butter’s longer shelf life. This resulted in an outstanding growth in butter production, outpacing most other dairy categories, amid a decline in cream supply.At the same time, the demand weakened within and outside the EU bloc. Internal trade declined, particularly in the retail segment, while extra-EU exports contracted significantly. Moreover, additional volumes were imported from other European countries at a lower price, competing directly in the industrial segment and contributing to volatility in the market.7. ImplicationsThe cream market is marked by a shift in the mechanisms of price formation amid an ample milk supply, with allocation decisions from processors as a key determinant. The continued price difference between cream and butter highlighted a structural bias in milk fat pricing favoring butter production, favoring butter production and limiting cream supply.This implies an increased risk of the cream market to price shocks related to broader dairy market conditions. The growing presence of lower-priced imports in the industrial segment could result in further price pressure and sensitivity to the global market. Meanwhile, risk implications appear to differ between the different segments, with industrial applications remaining more vulnerable to price fluctuations and higher competition in both the international and domestic markets.8. Methodological considerationsThis analysis is based on DCA Market Intelligence butter and cream benchmarks, compiled under established PRA methodologies. DCA benchmarks reflect independently assessed price levels derived from verified market inputs.Trade data was compiled from the Comext database. Considering that cream traded in the EU has a fat level of 40%, the CN8 codes tracking the trade activity of this product were: 04015031 and 04015039, both reporting a fat content between 21 and 45%. Products packaged under 2 kilo were assumed to be directed to the retail sector, while larger packages were assumed to be directed to the food industry.The DCA Market Report provides context and understanding to benchmark movements. It is not a forecast, nor a trading recommendation, nor a full market study. Access DCA Market Intelligence’s platform for continuous benchmark monitoring, historical price series, and additional market indicators.9. Additional referencesComext databaseFaostat UN Comtrade database