Weekly Update: More upward potential

After a few weeks of relatively stable prices, it seems likely the market can face a period of price increases. The market prices didn't break due to the high milk intake during the flush, and although some stocks are reported high, they don't seem to have too much impact on the spot market. Producers are still very relaxed, and the stocks with some end users are starting to run low. It seems those who were waiting for cheap milk-flush dairy commodities have waited too long and they will have to come to the market to secure their Q3 needs. 

In addition, we face a week where the weather in Western Europe is improving fast. Temperatures are rising above 20 degrees boosting the demand for fresh products and ice cream. Milk production seems to be over its peak and the thickness of the milk is starting to decline. Less milkfat in less milk led to higher prices for cream last week already, where most liquid traders expected this sharp increase only to be visible in June.

We have to admit that there are still sufficient signals that arent that bullish. We still hear well-stocked warehouses with butter and SMP, and from Ireland and the UK we hear sufficient availability of cheddar cheese. SMP demand in SE Asia remains calm, US NFDM prices keep declining and milk production in some parts of the world is increasing again. Chinees milk production is growing at an enormous rate, we hear growth numbers between 8% and 12% and some expect the Chinese to stay away as from the International market as an active buyer for a long time. Retail demand remains questionable and we will see how strong Food Service demand will be during the summer season.

PLMA and Eucolait

This week we think will be a bit quiet. Tuesday and Wednesday we think a big part of our partners will be visiting the PLMA in Amsterdam. We think most will want to wait and see how the sentiment among buyers and sellers will be. In the second part of the week, we think a lot of partners will visit Warschau to attend the Eucolait. Unfortunately, we aren't able to visit these events this year, next year we will try not to miss it! Usually these two events can be a catalyst for market directions, as meeting rooms can act like boiler rooms. It seems most partners are positioning themselves for a more bullish market with tighter availability and upward price potential. But if all think the same....