Mèden Agan

Yesterday proved to be a relatively quiet day, especially in terms of broker activity on our side. As mentioned in earlier updates, the butter market has exhibited considerable volatility, contrasting with the relatively stable conditions in the SMP and cheese markets. However, the sense of stability seems inadequate to capture the sentiments of those involved in trading Gouda, Edam, SMP, or Whey. The markets display an unmistakable nervousness, particularly for traders. Despite minor fluctuations in prices, traders aspire to witness a more sustained price trend, providing opportunities to enhance margins. Yet, with prices mostly moving sideways, some find themselves confined within a narrow range, yielding only marginal profits.

For those eagerly anticipating clarity from the GDT today, disappointment awaits. With a headline number of 0.5%, we don't anticipate a significant market reaction. Nevertheless, certain results have attracted our attention. Cheese experienced a 7.6% decline, dampening the slightly bullish expectations some sellers held for EU products. EU sellers, facing strong competition in export markets for cheddar and mozzarella, are unlikely to see relief with such results. The bearish cheese numbers may not only impact EU cheese but also influence EU butter. With cheese already facing lower valorization in the EU compared to butter and SMP, any production pickup based on this result seems improbable. Instead, it might lead to cheese factories redirecting milk/cream toward less production, putting additional pressure on the EU butter market.

A positive note emerged from the AMF side, up by 8.6%. AMF prices have finally caught up with butter prices, eliminating the discount. Examining powders reveals a familiar trend, with slightly higher prices for SMP and slightly lower prices for WMP. However, it remains uncertain whether these price changes are truly affecting EU prices. Thus far, EU powder prices seem impervious to external influences. Even with Soumman in the market for 7500mt for March/April/May, a small rally was expected but failed to materialize.

Mèden Agan

The overall GDT results paint a balanced picture, with only cheese signaling overproduction. Other commodities demonstrate a healthy balance between buying and selling interest. As highlighted in previous reports, the market appears content with this equilibrium, without aggressive buyers attempting to push prices down or producers seeking higher prices. While expecting prices to remain constant is unrealistic, at these levels, the market appears content. Only the EU butter market seems to be looking for a new strong move up or down.

One of our partners referenced an ancient quote from Aristotle, "Medan Agan," found on the temple of Apollo in Delphi, translating to "In nothing too much." In light of the wild swings in the butter market, he reflects on how buyers wanted prices to drop too much, and sellers sought them to rise excessively. He expresses hope for the butter market and its participants to find some repose, allowing the market to calm down and stabilize. The extreme volatility proves detrimental to producers, end-users, traders, and consumers. With this wisdom in mind, we'd like to share a bit of prose.

Upon Apollo's temple, a phrase of old,
"Mèden Agan" in wisdom bold.
In nothing too much, in moderation's art,
A timeless lesson for every traders heart.

In markets stable, a chance for trade,
Buyers and sellers, in harmony made.
Internationally, the understanding of this grows,
A truth embraced, as commerce flows.

Yet in the EU's buttered scene,
Volatility reigns, unpredictably keen.
Not good for consumer, producer, or trader,
A dance too wild, a risky wager.

For the advice echoes, clear and strong,
"Mèden Agan," in trade belong.
In nothing excessive, find the way,
For stability's sake, let moderation sway.

Consent for the buyer, fair deal for the seller,
A market in balance, where values dwell.
So heed the words from Delphi's gate,
In commerce and trade, find a measured fate.

G.F. Yriad