Market trends for raw materials

Atlante spotlights trends in the major commodities markets as a tool to help with FMCG buying strategies. This update focuses on the European dairy sector, highlighting the latest milk market dynamics and key challenges facing producers and exporters as of July 2025.

Summer 2025 is proving to be more challenging than expected for the European dairy sector. Despite the optimistic forecasts from the European Commission, which had projected a slight increase in EU milk production (+0.5% compared to 2024), the first four months of the year have shown a completely different scenario, with a 0.2% decline compared to 2024. The main producing countries (Germany, France, and the Netherlands) are facing a phase of contraction, while only a few (Poland, Italy, and Ireland) are showing modest signs of growth.

Among the main causes: increasingly strict environmental policies, high production costs, and recurring outbreaks of bluetongue and foot-and-mouth disease.

LUMPY SKIN DISEASE (LSD)

In recent weeks, a new threat has emerged: Lumpy Skin Disease (LSD)—a viral disease that affects only cattle and is transmitted by biting insects. It poses no risk to humans and is not as highly contagious as other diseases (such as foot-and-mouth disease), but it can severely reduce the productivity of affected animals. The first LSD outbreaks were reported as early as late June in Sardinia, northern Italy, and France.

As provided by EU regulations, surveillance zones (50 km) and protection zones (20 km) have been established, with restrictions on the movement of cattle. However, milk from these areas can still be marketed, provided it is destined for industrial processing with appropriate heat treatments (such as pasteurisation or equivalent methods).

Several non-EU countries have already introduced trade restrictions:

• United Kingdom: Imports of raw milk, live animals, and certain dairy products from Italy have been suspended. Unpasteurised cheeses can only be imported if their aging process began before May 23, 2025.
  
  
• Canada: Imports of Italian milk and dairy products that have not undergone heat treatment are banned; however, pasteurised products are still allowed.
  
  
• Japan: Imports of untreated dairy products intended for animal feed have been suspended.
  
  
• Australia: Italy has been removed from the list of “LSD-free” countries; only products meeting specific safety requirements are permitted.

In general, pasteurised and aged dairy products remain eligible for trade according to the international standards set by WOAH and EFSA.

Compared to the foot-and-mouth disease crisis that hit the sector in Germany earlier this year—causing an export ban with severe consequences— LSD is considered a much more manageable threat because:

• It does not transmit to humans
• It spreads only through insects (not through animal contact or contaminated objects)
• Processed dairy products remain safe for consumption

Despite the challenging sanitary context, the dairy market remains tight (also due to seasonal demand peaks and reduced supply):

• The average EU milk price in May reached €53.09/100 kg (+15% compared to May 2024)
• Spot milk prices in Germany exceeded €61/100 kg, showing an 18% increase between May and June

In summary, LSD is impacting the sector, but a full trade shutdown, like those seen in the past with more severe diseases, is not expected. Pasteurised and aged dairy products continue to circulate freely both within Europe and in many foreign markets.

However, the sector should still prepare for a highly volatile market environment and potential requests for additional certifications from international customers.

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