The 3C’s Of the Bearmarket: Claims, Cancelations and Complaints

"If you don't have any problems, you haven't done enough deals!". We remember the first time somebody told us this. Because the more business you do, the more chance there is that there are problems coming along the way. But it is funny how claims and cancellations rarely occur in a bullish market but are plenty around when the market is down. 

We can proudly say that we have done a lot of business in the previous months, but we have to face the harsh truth that we are now faced with a big amount of complaints, claims and cancellation threats. The reason seems to be that there is a big difference between contract prices and market prices. Some even are as far apart as € 2500,- per mt. For buyers, there is a big incentive to claim or even cancel loads. You would think that no matter the market price, a claim is only a claim when well-funded with data. But looking at the current market it seems that buyers who can be very flexible when it suits them, can now be rigged and strict on contract details.

Buyers who were able to take cheese up to 10 weeks of age when the market was at € 5300,- now only can use the goods for up to 7 weeks. Buyers who were happy with slightly discounted butter from more than 6 months old when the market was at € 7000,- can now only take the goods up to six months, or else they will have to cover it elsewhere. And on exports, the cancellation reasons differ even more. We hear wrong stickers, to late loading, aged product and even some "I never received the contract" reasons come by.

With a lot of discussions about claims, customers threatening to cancel orders and complaints about late payment, late collections, late deliveries and big differences between the bids of yesterday and today we can honestly say that we haven't had a lot of time to focus on the market today. We did however see that the market for butter continues its decline while the cheese market seems to have found a temporary floor. The market for liquids continues to trade lower. The cream is trading around € 5100,- and we even heard some deals again starting with a € 4..... . Prices for spot milk range between 34 and 37ct and SMC prices were not able to keep the € 2000,- levels and are trading a bit below.

Looking at the market direction we don't think it will be our last day discussing the 3C's of the bear market.