Summer Sale Starting

It seems the summer sale is starting to gear up. Sellers for all commodities are now actively looking for to offer their products to the market, and they are willing to accept lower bids as they see the competition is also lower their offers. We think the rest of the week will be a search for a new (temporary) floor. 

The weak demand for liquids seems to be the starting signal for most sellers. Although we expect to have the clearest view on the demand for liquids today, yesterday showed that the buying interest is smaller than the selling interest. We hear buyers for raw milk are hard to find and sellers are aiming for prices around 35ct. Cream prices are reported between € 5000 and € 5250 and SMC prices are offered around € 2050 but without finding much interest.

With a lot of products already in the warehouses, we see that buyers try to buy products for as far away as possible, while sellers prefer to find buyers who can collect the goods and take them out of the warehouses. Producers seem to face the same problems. With less demand for close by we hear a few have decided to lower the production of commodities, the expectation is that this will result in more pressure on the market for liquids.

We see most sales pressure coming from traders, but while they have been pushing to sell products for Q3 and Q4 (and filling that demand) we see that producers only come to the market just now. And although long-term partnerships with end users will provide a part of the much-needed outlet, we foresee that the spot demand will be a lot smaller compared to the previous months. And where normally we would expect traders to pick up the cheaper loads, we see most aren't able to take on the extra stock as credit lines and warehouses don't provide any chance to "cash and carry" these stocks from producers. Only those with deep pockets and unused warehouse space might be able to profit from this year's summer sale.

The GDT pulse today ended with a lower result (roughly 2.5% lower compared to last week's GDT) not really boosting export expectations.

All information from the last two days combined paints a clear picture where supply is bigger than demand, logically leading to lower prices. And those who complain that low prices aren't healthy for the dairy market, we would like to remind them of ancient market wisdom. "The best solution for low prices, is low prices!" Because we might be bearish short term, long term we are confident the dairy market will see higher prices again, and probably sooner than most expect.