Stuck with Stock

Again an active day in the dairy trade from our side. The direction for most commodities seems a bit sideways, although we keep seeing slightly higher trades for powders. The most active partners in our network have always been traders, but in recent weeks it seems they are providing 80% of the liquidity and 20% seems to come from our suppliers. End users have been out for a long time. Most seem to be stuck with sufficient stock and are able to roll forward their position well into Q1. And it's not only the end users that are stuck with stock. We keep seeing traders needing to liquidate stock (only to buy back fresher stock or product for further out).

But not everyone is stuck with stock. Those in need of fresh liquids still seem to be outnumbering the sellers for fresh products. We hear prices for cream traded again higher in the morning, although we hear prices at the end of the day start to cool off. Cream prices traded well up to € 6800 in the morning, but at the end of the day, we heard trades back down below € 6600. SMC and raw milk the market also seem to be left with a bit more offers putting pressure on prices a bit. The French market remains very tight and we see cream prices at € 7000 and above. That put the French butter quotation at € 4340 in a strange light.

The biggest problem we see in the market remains the stock/long position in the market for Q4 that nobody really seems to need to use, but that most prefer to have as a hedge against the quickly rising prices in Q1. Speaking to the end users they seem happy enough to roll their stock into the new year, but not all traders seem to want to do that. They are looking to sell their stocks but buy back something for Q1 or Q2. This seems to be the case for butter, SMP and cheddar. Fresher products seem to be affected less by the stock and these prices seem to benefit from the (seasonally) low milk intake.

Looking at the quotations we see a bullish trend. For butter the French, at € 4340, remain on the low side, the Germans corrected their high quotation from last week (€ 4750) by putting the price a bit lower this week at € 4700, and the Dutch pulled their price back up to market levels at € 4750 as they lagged the market a bit. On powders, we see a bullish trend overall in quotations, following the world market sentiment and prices.