Milk prices plunge to lowest level in ten years

The European dairy market has taken a hard hit in a short period of time. The DCA Benchmark Price for Raw Milk has fallen back to €14,50 per 100 kilos, the lowest level in ten years. European butter and cream prices have also dropped to their lowest point in five years, according to data from DCA Market Intelligence.

While consumers in supermarkets may benefit from lower prices in the short term, partly due to an intense butter price war in Germany, many dairy farmers are entering the danger zone as milk prices fall below production costs.

Key figures at a glance:
• DCA Benchmark Price for Raw Milk at €14,50 per 100 kilos, the lowest level since 2015. (Free market price)
• Butter prices in Northwest Europe since June -45% to €4,000 per ton
• Gouda foil cheese and cream prices under severe pressure
• Average milk price in the Netherlands since September -€13 to < €42.50 per 100 kilos
• Average production cost dairy €45 per 100 kilos

From milk tsunami to export pressure
The price drop in the European dairy market has been exceptionally sharp in a short period. Since June, the butter price in Northwest Europe has fallen by 45% to €4,000 per ton, the lowest level since spring 2021. Prices for cream and Gouda foil cheese have also come under heavy pressure.



On the spot market for liquid dairy, extreme price pressure is evident in mid-December. The spot price for raw milk has fallen back to €14,50 per 100 kilos. Market participants expect further declines toward the New Year.

“The production has increased so rapidly since the summer that the market is talking about a ‘milk tsunami,’” says Wouter Baan, dairy and meat analyst at DCA Market Intelligence. “Due to the effects of bluetongue, the calving pattern has been disrupted and the production peak came later this year. At the same time, the rapid rise of the euro is hindering European dairy exports. Altogether, this is resulting in a significant milk surplus.”

According to Baan, a rapid price recovery is unlikely for the time being: “The global milk surplus is expected to continue weighing on prices in the coming months.”

Dairy farmers below cost price
For dairy farmers, sentiment is turning quickly. The average milk price in the Netherlands has dropped by €13 per 100 kilos since September, falling below €42.50. This means the paid milk price is well below the average production cost, which in practice exceeds €45 per 100 kilos.

“The expectation is that milk prices in 2026 will fall back below the psychological threshold of €40 per 100 kilos,” says Baan. “In Ireland, we are already seeing this. For many farms, it will then become a matter of survival and tightly managing costs and liquidity.”

Butter war: how the consumer benefits
The sharp decline in raw material prices is now also reaching supermarkets, despite the fact that retailers often work with long-term contracts. The effects are especially visible in Germany.

“A fierce butter war is taking place in the German retail market,” Baan says. “Hard discounters are using packaged butter as a loss leader. The lowest price we are currently seeing is €0.77 for a 250-gram pack of butter. That is far below the level in the Netherlands. German retailers are known for extremely aggressive price promotions, and we are now seeing those in full force.”

For consumers, this means lower shelf prices, especially heading into the holiday season. At the same time, this price pressure ultimately lands back on the primary producer, the dairy farmer.

Disrupted market around the holidays
Around the holidays, a logistical factor adds further strain. Due to fewer processing days at dairy factories, extra pressure emerges in the market for fresh dairy products.
Milk processors face surpluses during this period, which they must offload onto the spot market at dump prices. This increases pressure on the prices for raw milk, cream, and other basic products.

About DCA Market Intelligence
DCA Market Intelligence B.V. is a leading Price Reporting Agency (PRA), specializing in independent benchmark assessments and market analysis within the international agri-food sector. With a strong focus on transparency and objectivity, DCA Market Intelligence provides reliable price information essential for professional market participants worldwide.

The DCA Benchmark Price for Raw Milk is an independent reference price established using a standardized methodology and is used by the market as a guiding instrument for contracts, risk management, and strategic decision-making.