Breaking Butter Prices

Yesterday, the market continued to show weakness. We observed increased selling activity for SMP and cheese, but prices remained relatively stable as sellers were not motivated to offer lower prices. This contrasts with the butter market, where prices dipped again yesterday. The premiums paid for November/December collections earlier this month are rapidly vanishing, and prices are steadily declining. The relatively steady cream market introduces some uncertainty, though even the cream market shows signs of softening. The key question seems not to be if butter prices will drop further, but when, and more importantly, how low they will go.

Spot Liquids: Gradual Softening

Prices for spot liquids are gradually easing. Milk prices have fallen below last week's levels, and SMC prices are now below €2,300. Cream prices, however, show more volatility. Next week's quotes remain as high as €10,700, but there are also reports closer to €10,000. Meanwhile, for the Christmas period, cream offers are around €8,500–€8,600. (that at € 2000,- gap with spot and 5 weeks forward, and a € 3000,- gap with last weeks highs) The key question is whether cream prices will recover after the holiday season. If they don’t, cream at €8,500 would justify butter sales around €7,100 in Q1. Should prices fail to hold above these levels, a sharper correction may follow.

Butter: December Prices Declining Rapidly

Butter prices for December are decreasing more quickly than those for Q1, though December prices still trade at a premium. However, this premium may erode quickly. Product arriving too late for December production could end up as stock for January. Most buyers seem inclined to stock in January, paying a small premium, rather than carry it into 2025 on their balance sheets.

Q1 butter prices face pressure due to expectations of increased milk supply and weaker demand—an established seasonal trend. Historically, Q1 butter prices are lower than Q4, except in years with declining milk collection. This year, however, EU milk deliveries for Q1 are expected to surpass last year’s levels, with global trends also pointing upward.

Yesterday, prices for NL/DE/BE butter in Q1 dropped to €7,200, while Irish butter for December was at €7,350 FCA NL. The bearish trend in the market is now evident.

Product	Origin	Volume	Period	Price	Incoterm
Lactic Unsalted Fresh/Frozen	Irish	88	December	€ 7450	FCA NL
Sweet Cream Unsalted Frozen	Portugues	44	Nov-Dec	€ 7800	FCA PT
Sweet Cream Unsalted Frozen	Irish	88	Dec	€ 7700	FCA NL
Lactic Unsalted Fresh/Frozen	Arla DK	66	Q1	€ 7250	FCA NL
Lactic Unsalted Fresh/Frozen	NL/DE/BE	66	December	€ 7650	FCA NL
Lactic Unsalted Fresh/Frozen	NL/DE/BE	132	Q1	€ 7200	DAP NL

We Expect to have Buyers for

Product	Origin	Volume	Period	Price	Incoterm
Lactic Unsalted Fresh/Frozen	Irish	88	1th half dec	€ 7200	FCA NL
Sweet Cream Unsalted Frozen	Portugues	44	Nov-Dec	€ 7200	FCA PT
Sweet Cream Unsalted Frozen	Irish	44	Week 49	€ 7200	FCA NL
Lactic Unsalted Fresh/Frozen	Arla DK	66	Q1	€ 7000	FCA NL
Lactic Unsalted Fresh/Frozen	Irish Winter	66	Q1	€ 6900	FCA NL

Cheese: Wide Markets get Wider

The cheese market continues to widen daily. Buyers seem to be closely monitoring the butter market, anticipating a similar decline in cheese prices. However, the correlation between butter and cheese pricing has been inconsistent over the past year. While their general trends may align, there is no clear formula to predict that cheese prices will shift in proportion to butter price changes.

We’ve observed some demand for Gouda, with indications around €4,250, though sellers are still aiming for €4,500. In the mozzarella market, bids are starting with a “3,” while all offers remain in the “4” range. There is potential for mozzarella prices to fall below €4,000 in the short term, but Gouda prices are unlikely to follow the same trajectory.

The dynamics between different cheese types reflect varying market conditions, and while some softening is evident, significant divergences in pricing trends remain likely.

We expect to have the following

Product	Origin	Volume	Period	Price	Incoterm
Gouda 48 Slicing	NL/DE	88	December	€ 4500	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	88	December	€ 4050	FCA NL/DE/BE
Cheddar	UK	44	Dec	€ 4800	FCA UK
Gouda 48 Slicing	NL/DE	132	Q1	€ 4425	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	66	Q1	€ 4150	FCA NL

We Expect to have Buyers for

Product	Origin	Volume	Period	Price	Incoterm
Gouda 48 Slicing	NL/DE	88	December	€ 4250	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	88	Nov-Dec	€ 3800	FCA NL/DE/BE
Cheddar	UK	44	Dec	€ 4550	DAP NL
Gouda 48 Slicing	NL/DE	132	Q1	€ 4200	FCA NL/DE
Mozzarella 40%	NL/DE/BE/DK	66	Q1	€ 3900	FCA NL

Powders:

There’s little new to report from our side as the market remains indecisive, with limited activity from key players. We are receiving plenty of offers, but sellers anticipate a more bullish market ahead, while most buyers expect a cooling trend, with prices returning to "normal."

The fiercest debates are currently in the powder market. While bearish trends are widely acknowledged in the butter and cheese markets, opinions vary on the severity of the decline. In contrast, the powder market is sharply divided into bullish and bearish camps. Each side is firmly convinced of a potential major shift in prices, setting the stage for either a significant correction downward or a strong upward surge. Uncertainty dominates, and the market seems poised for significant movement in the near term.

We roughly have the same markets as yesterday.

Product	Origin	Volume	Period	Price	Incoterm
Skimmed MIlk Powder MH	Solarec	100	Jan	€ 2725	FCA BE
Skimmed Milk Powder MH	German	50	Dec	€ 2725	FCA SP
D40	Spanish	100	December	€ 1025	FCA SP
Skimmed Milk Powder, Fresh	Solarec	300	Q1	€ 2800	FCA BE
Skimmed Milk Powder 38%	UK	200	December	€ 2700	FCA NL
Skimmed Milk Powder 36%	EU	100	November	€ 2650	DAP NL

We would have the following bids

Product	Origin	Volume	Period	Price	Incoterm
FCMP BigBags	EU	96	January	€ 4220	FCA NL
Skimmed Milk Powder n 36%	EU15	44	November	€ 2550	DAP NL
SMP BC Spec	EU	300	Q1	€ 2650	DAP BE
FCMP	IRL	24	December	€ 4300	FCA NL/BE