Season Supply Shortage Seems Over

Yesterday the activity in the market appeared again after it being gone the last two days. We still see that our partners are cautious in taking new actions as uncertainty is the only certainty they have. During the day it felt the market cooled down a bit again due to a better availability in milk intake. The effect of the heatwaves seems to disappear and milk is flowing a bit better. The short-term shortage of seasonal milk supply seems to be behind us. 

Looking at the spot market for liquids we see that raw milk prices keep trading relatively steady between 42ct and 45ct in west EU. In France, the milk supply is increasing again, but still, milk is expensive. We hear raw milk prices trading between 55ct and 60ct. Cream prices came off a bit and we hear prices between € 6450 and € 6550 for western EU cream, again France being the outperforming with cream prices at € 7000 still. The weakest liquid seems to be SMC. SMC prices have come down to levels between € 2150 and € 2250

Commodity prices seem to react a little to the lower prices for liquids. During the day we got more sellers for SMP and butter prices eased slightly, even though it is impossible to produce most commodities made from the raw materials. Only SMP production is nearing the cost-price equivalent. A further drop in SMC prices should bring a ceiling to where SMP prices might rise to.

What did not go down were the quotations. Especially the French pulled up their SMP index from € 160,- per mt to € 2510 and their butter price increased a whopping € 610,- toward € 4950! The French keep living up to their expectations that there is nothing you shouldn't expect from them.  It also underlines again that by hedging yourself with the French quotation in your mix, your financial liability lies in the hands of a few very unpredictable men and women.

Overall the market just feels very wobbly, and most partners would like to sit out this wobbly ride until we get to a smoother road. Until then most will only buy and sell what they absolutely need to as price action is to unpredictable for most.