Where does the train stop?

Yesterday the market had to process the results of the days before and we had a relatively calm start of the day. But when the quotations for butter, SMP and whey came in we saw the market come back to life.  The fundament of the dairy market is breaking down and we see offers coming from all corners of the market, driving prices down. 

The GDT results of yesterday needed to sink in before the market could trade lower again. But pressure is building quickly and we see producers, traders and end users all with products that they want to sell. And if natural buyers even become sellers, the outlet for all these additional products will not find a place, not even if prices drop another 10% or more.

The EEX quotations for butter came down 3,5% but the average is still a good € 900,- higher than the market we see in Q1. The quotations for SMP even came down 6,8% to € 3240, but this is also still almost € 350-€400,- above the market we see for Q1. This means that both butter and SMP price need to correct at least 10% down to catch up with market prices. And judging the offers we see, and the lack of buyers we have, the correction won't be over after this 10%.

One of our closest partners asked us where this train of doom will stop. We are sure we will stop at a few stations along the route, but the final station we see is closer to the levels of last year. We have a bad habit of repeating ourselves, but last year around this time we had less milk, less stock and more demand and better exports and prices traded below the prices of today. Those who can explain to us why these conditions should lead to higher prices we invite to call us early in the morning.  Because more milk, higher stocks, less demand also slow exports can only lead to... ?