A Slow Decent

Veteran dairy traders know that price swings can be dramatic—and anyone specializing in butter knows they can be downright extreme. So for those active in the butter market over the last decade, the current price correction might feel a bit sluggish. But make no mistake, the correction is here. All commodities are sliding lower, and the outlook is growing dimmer. Only a few producers seem willing to acknowledge the current low-demand cycle and the forecasts for higher production. Those in denial may face a very volatile January since it’s becoming clear that most producers still need to sell part of their December and January volumes, while buyers have already shifted their focus to Q2.

Liquids Market:

The liquids market took another dip today, though raw milk prices remain relatively stable. In France, raw milk is trading around 45 cents, and in the Benelux region prices are still holding firm above 50 cents. At these levels, spot prices now sit below contract milk prices. SMC prices have eased back to between €1,750 and €2,000. The widest spread we’ve seen today is in cream. Cream for early next week traded between €8,200 and €8,500, while for the end of next week and the week after, prices are mentioned between €7,700 and €8,000. Producers can currently convert cream into butter at about €6,800, and if cream prices dip further, we foresee more offers coming into play.

Butter: More Small Cracks

Butter prices are holding up better than some might have expected, but we continue to see incremental declines. NL/DE/BE butter for December traded down to €7,100, and current buying interest seems to surface only below €7,000. Irish butter has reportedly traded as low as €6,650 FCA Ireland for winter butter, and we see summer-grade butter offered well below €7,000.

For Q1, prices are also inching downward, with futures trading at around €6,900. Physical butter trades have been quieter than anticipated: sellers aren’t keen to increase their short positions, and buyers aren’t in a rush to lock in volumes. End-users’ expectations remain below €6,800 delivered for Q1 and below €6,600 for Q2. The market seems to be waiting for producers to join the party. If our information is correct, the cheapest producer offers currently hover just above €6,900 for NL/DE/BE butter.

The quotation drama continued today. The French took € 490 off their quoted price down to € 7340 and the Dutch revised their price down to € 7150. Only the Germans remain stubborn and hold their quotation up as high as € 8150. While we understand that there have been some higher sales done last week still above € 8000 we feel the € 8150 quotations doesn't resemble the majority of the traded volume prices. The current gap between the Dutch and the Germans is a ridiculous € 1000,- gap that should be closed to keep the quotations relevant for EEX settlements.

We expect to start the day with the following market indications:

Product	Origin	Volume	Period	Price	Incoterm
Lactic Unsalted Fresh/Frozen	Irish	88	Week 52	€ 6850	FCA NL
Lactic Unsalted Fresh/Frozen	Denmark	44	January	€ 7000	FCA NL
Sweet Cream Unsalted Frozen	Irish	44	Dec	€ 7000	FCA NL
Lactic Unsalted Fresh/Frozen	Arla DK	66	Q1	€ 6900	FCA NL
Lactic Unsalted Fresh/Frozen	NL/DE/BE	66	December	€ 7100	FCA NL
Lactic Unsalted Fresh/Frozen	NL/DE/BE	132	Q1	€ 6900	DAP NL

We Expect to have Buyers for

Product	Origin	Volume	Period	Price	Incoterm
Lactic Unsalted Fresh/Frozen	Irish	88	Dec	€ 6650	FCA NL
Lactic Unsalted Fresh/Frozen	Irish Winter	66	Q1	€ 6650	FCA NL
Lactic Unsalted Fresh	NL/BE	132	Q1	€ 6800	FCA NL
Lactic Unsalted Fresh/Frozen	Arla DK	66	Q2	€ 6500	FCA NL
Lactic Unsalted Fresh/Frozen	NL/DE/BE	66	Q2	€ 6550	FCA NL

Cheese: Concerns About Demand

Cheese prices remain under pressure, particularly for December. Mozzarella sales have been reported at €3,650 DAP, and producers across various regions seem to be carrying a bit of extra stock. For Q1, the bid-ask spreads remain between €100 and €150, with no real change since yesterday.

Conversations with cheese industry partners highlight the concerning lack of buyer activity. While we don’t have direct data, the current drop in cheese prices seems driven not only by increased milk supply but also by a noticeable slowdown in demand. We expect the market to open weaker today.

Product	Origin	Volume	Period	Price	Incoterm
Gouda 48 Slicing	NL/DE	88	December	€ 4150	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	88	December	€ 3900	FCA NL/DE/BE
Cheddar	UK	44	Dec	€ 4800	FCA UK
Gouda 48 Slicing	NL/DE	132	Q1	€ 4150	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	132	Q1	€ 3850	FCA NL

We Expect to have Buyers for

Product	Origin	Volume	Period	Price	Incoterm
Gouda 48 Slicing	NL/DE	88	December	€ 3800	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	88	December	€ 3500	FCA NL/DE/BE
Emmental	NL/DE/IE	132	Q1	€ 4700	DAP NL
Gouda 48 Slicing	NL/DE	132	Q1	€ 4000	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	66	Q1	€ 3700	FCA NL

Powders:

We’ve seen some activity here: Irish Codex traded at €2,475, and Solarec at €2,600. FEED prices seem to be around €2,450 for Q1, while buyers are now aiming at around €2,380 for Codex and €2,450 for non-standardized materials.

Recent Chinese dairy import data shows SMP imports at historical lows. November appears to be picking up slightly, but with more milk available worldwide, we’d need exceptionally strong demand to lift prices. Our prediction remains unchanged: powder markets will likely move sideways in Q1 and Q2 of next year.