Reluctant Sellers and Hesitant Buyers

Yesterday was a relatively quiet day. We spent plenty of time on the phone with our partners, but most weren't in the mood to do business. We do have plenty of sellers, but most are reluctant to offer at a lower lever as the majority still sees a bullish market. We don't have many buyers, but those who are out there are very hesitant. They. see more offers, a slightly weaker liquid market and feel that prices might come down. One thing most of our partners seem to agree on is that much higher prices seem unlikely. 

It took a bit longer than usual, but we do see that prices for Q1 are starting to flatten a bit v.s. Q4 prices. It is not unusual that prices in November and December trade higher than the prices in Q1. The high demand and relatively low production period always cause prices in Q4 to rise, and the higher production v.s. consumption period in Q1 causes prices to drop. The market anticipates this almost each year by discounting Q1 vs. Q4.

For some cheeses, we already see that partners are offering Gouda and Mozzarella at a slightly lower price compared to the spot prices in November. Gouda prices for closeby are still trading between € 3700-€ 3750 while Q1 offers are to be found between € 3650 and € 3700. For Mozzarella the price indications from sellers for November and December are flat v.s. Q1 offers. Buyers discount Q1 a bit more.

Q1 prices for some origins of butter are flat v.s. prices in this year and some even are available at a discount. Those in need of polish butter in October and November will still have to pay € 5000+ while Q1 offers are available below € 4800. Irish butter in Q4 is offered at around € 4650 fca NL and buyers for Q1 target roughly the same price. For NL/DE/BE there is still a premie paid as we see offers for Q4 at € 4750 while we have bids at the same price in Q1. We expect it is only a matter of time before that reverses.

Last but not least we see that the premium Q4 v.s. Q1 for powders is a lot bigger. It seems there aren't a lot of sellers willing to sell Q1 as worldwide demand is a bit black box for most. As soon as the market gets a better sight on this, we expect the market premium for powders Q4 v.s. Q1 to flatten as well. And with SMC prices under pressure, we would think Q1 prices need to come off a bit.

But with all the uncertainty in the world, we understand the reluctance to sell and the hesitance to buy. There is a lot of risk for both buyers and sellers to take a leap of fate and buying/selling anything you don't need or have seems too risky. We, therefore, think this market might trade a bit longer rangebound as it has in the previous days.