The Daily Dairy Digest: 17 October

We are in Paris since yesterday and have already done a few small rounds over the floors of SIAL. The big crowd is expected to come in today and we hear that the previous days have been relatively quiet. But overall the quality of the people who are visiting seems to be of a high standard. We will be visiting ourselves and hope to connect with a lot of old and new friends. 

Asking around, the sentiment of the SIAL is bearish. We haven't met many people who think the market will go up, but some are more bearish than others. Even most producers admit that there is a bit more milk, a bit less demand and a bit more stocks around. So the question of this SIAL is how much pressure will there be?

There is also some light to report on the dairy market. Speaking to some end users it seems that demand for private-label products is extremely well. And with very good retail contracts end users are happy to buy at the current market price. The big question does remain how well demand will keep up now retailers are going up with their prices.

Another big fear we hear on the floors of SIAL is the demand on the export market, and especially in China. The Chinese economy seems to be cooling down fast. On different commodities we hear demand is Asia is down, collections are being pushed back and new orders are staying out. It will take maybe a few weeks for this pressure to be felt on the EU market, but the sentiment is already affecting new contracts.

But the most bearish view we have heard is bout the liquid market. We have spoken to several of the traders we work with and they all have the same view. The additional milk that is expected to increase over the next 6 months will have trouble finding outlets. With demand fading, costs rising and stocks mounting, the spot market for milk is expected to be flooded. If the expectations we hear will become reality the market is in for a firm correction.