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Volatilty is King

2 min de lectura

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    February ended with again a crazy volatile day. Butter prices came down € 300-400,- in a day again, prices for cheese also dropped down € 100,- at least and the market for powders is starting to show cracks as well again. As we felt yesterday, sellers came to the market, only to find buyers stepping back / out of the market again, diving prices down. It still doesn't mean demand is suddenly down, it just means we have a lack of buyers compared to the quantity of sellers. 

    Looking back at last week, we are now back at the same level we were at when we came to Dubai. With the sentiment in Dubai quite stable to bearish in the first two days, we were caught a bit by surprise by the sudden price increase. For us, this correction feels like we are back to the where consensus was 7 days ago.

    Last week our buyers complained the market was pushed up artificially and we were witnessing some market manipulation. And today we got the same feedback from the sellers, who complain that the market is being pushed down again. We think the price action of the last weeks is a fair reflection of the actual market, and that is a market where we are in new territories. With record high inflation, record high milk prices, economies that are outperforming the expectations of all experts, federal government increasing interest rates at the highest rate ever seen, energy cost dropping back from 15fold levels to normal, increased farming costs low unemployment and international tensions we are witnessing a market without any reference points. The only certainty for the next weeks is that uncertainty and volatility will dominate every conversation.

    The market for liquids didn't move down much, but commodity prices moved more in line with where commodities have been trading. If prices for cream and SMC and raw milk manage to hold we might see some sideway trading for the rest of this week. However, the demand for commodities seems to have disappeared completely over the last 24 hours and it feels like we have to dip a bit lower to find buyers again.

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