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Cracking, But Not Breaking (Yet)

2 min read
  • Butter

Yesterday the market took another step down. There are a lot of cracks visible in the market, but so far it doesn't feel that the market is breaking. But if the stocks will keep pushing on prices like they did yesterday it feels we could break down a lot lower before the holidays have started. 

Early in the morning, we saw the market being pushed down by lower liquid prices and good availability. We hear spot milk i trading between 34ct fca factory and 37ct delivered. Cream is roughly trading at € 5000,- but we have had several buyers claiming to buy at € 4900 or even € 4800. SMC prices are now available just below € 2000,- (last week just above).

Sellers on futures also came more aggressive in the market. Finding buyers in this market seems to be an issue for the physical and future markets. Butter seems to have taken the biggest correction with August trading as low as € 4250, and Q4 at € 4550 for NL/DE/BE (after trading € 4725 yesterday). SMP sellers seem to come down to € 2200-2250 levels but they still aren't finding any buying interest and Gouda traded down towards € 3450 after trading yesterday at € 3525.

We think the next 2-3 weeks will be crucial for how the summer period, we think sellers need to find some outlets fast because, with the current sentiment, we think mid-July to mid-August outlets will be even harder to find.

Eyes turned toward the export market

With EU demand mostly covered (so it seems) our sellers need to start looking further abroad. Export destinations seems to become more attractive at these levels. We hear some partners have been selling a bit more quantities to the middle east for butter and Asia start to turn its eyes towards Europe again when we are nearing prices below € 2300 for SMP. Japan and Korea also seem eager to take in some extra cheese if the price drops to levels we saw between February and May.

But with pressure in the US also building our EU partners should not try to overplay their hands. CME prices clearly point towards more pressure.

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