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A Retail Boost? Or Deadcat Bounce?

1 min read

    The market seemed to have found a floor yesterday, or at least for the fat market it did. But if it is a significant turn in sentiment or just a famous "dead cat bounce" we will probably know in a few days/weeks. Today butter moved up almost € 250,- for some origins, exposing the nervousness amongst a few buyers. But fundamentally we don't see much reason for the market to turn (yet). 

    Yesterday we saw a perfect combination of factors hit the market at the exact right time, causing a bit of panic among buyers and optimism among sellers. After a few days of inactivity and stable prices for liquids (even slightly higher) the market reacted to the newly negotiated retail price for butter (€ 5200 if we are well informed), a good bit of buying interest in Q3 and Q4 on the EEX futures, lifting up the levels, and a few repackers in the market looking for the product for closeby deliveries.

    But we can't really say we see a fundamental change yet. Cheese prices are still sliding down, and we got again lower offers for SMP. Discussing with various partners some think the change in retail price will give a boost in retail demand and give a strong fundament for the coming months. Other seem to think this is just a dead cat bounce and the market will continue to decline.

    We were not that surprised by the move up, as we were expecting an effect from the new retail prices. Last week we wrote the article "Will retail stabilize the market?" and we warned for a short and sudden uplift. But we can't see this change the balance for supply and demand for the short term. So if next week the dust has come down, we expect the "dead cat" to roll over and role further down the hill.

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