Bullish Market Ignores Bearish Fundamentals

Yesterday was clearly a day where a lot of partners spend their time listening to the presentations at Eucolait and, more important, spent time mingling and mixing thoughts about the market. Trading activity was quite low as it wasn't easy to get a hold of our partners. And those we did speak to didn't seem any wiser after the presentations. 

Again, most of the presented data also seem to be quite bearish again. Lower demand, lower consumption, lower exports, lower economic growth and higher milk production (nothing new here). There is a huge uncertainty about production and demand in H2 therefore the premiums buyers have to pay to manage the risk are big.

If you want to be bullish in this market, you still have plenty of reason to be. Because even under these bearish market fundamentals the market manages to trade higher and higher. Especially cheese is hard to find and for cheese, we hardly see any stocks. You can imagine that once market fundamentals turn more bulls (less milk, higher demand, export improving) the tight market might increase a lot more.

And those with bearish glasses can still point to the fact that most data out there should lead to lower prices. Those who read our updates regularly know we sometimes have a strong opinion about the market direction. But at this moment we just dont know. It seems analysis, reason and predictability have left the dairy market for now, and we just have to swing up and down with the market sentiment.