Heat Under The Spotmarket

The spot market is undeniably heating up. Some might say it's overheated, though that implies an imminent cooldown. We don't see that happening for at least a few more weeks. In the liquids market, cream is stealing the spotlight. Cream prices in the NL/DE/BE region have surged to as high as €10,600 FCA and up to €10,800 DAP, while in France, the battle for cream has driven prices to nearly €11,500 DAP.

What's fueling these eye-watering cream prices? It appears the strong demand for butter from both retail and industry has intensified, leading to increased demand compared to previous years. Add to the fact that a lot of buyers are on a "we can always buy expensive" strategy and we have double the demand we normally see in the last weeks of the year. Traditionally, frozen stocks from Q2 would be utilized around this time, but those reserves have literally run dry, forcing buyers to chase after freshly produced butter.

Although we haven't been able to broker a lot of volumes ourselves, reports are coming in of ever-higher trades for fresh German sweet cream butter, with the highest reaching above €9,000. Meanwhile, Fresh (and frozen) Polish butter remains in demand, though the best offers we've seen are just below €9,000—and even then, buyers are hesitating. Over the next few weeks, this market is likely to tighten further, with cream and fresh butter prices set to rise.

As for Q1, butter prices are largely moving sideways. Fresh German butter is offered at €7,550, and fresh/frozen lactic butter around €7,525. Buyers are hesitant, unsure of whether they can pass these high prices through the supply chain. Their bids linger just below € 7500 although we see that it will only take 2-3 purchases to move up the price towards new highs. But why can the market bear these higher prices in Q4 and not in Q1? With solid support from bids of around €7,500 by industrial buyers, retailers, and traders, it seems only a matter of time before higher trades for Q1 materialize.

We anticipate more action once the quotations are released. Our forecast? The Dutch are likely to raise their prices just below €8,000, while the Germans may either hold steady at €8,000 or inch slightly higher. The real wildcard is the French—if they release a new quote, we wouldn’t be shocked to see a record high. After all, with cream prices over €11,000, butter prices should naturally be dragged up as well. Should the average price break €8,000, we could see a significant upswing for both November/December and Q1 prices.

NL/DE/BE

Period	Bid	Size	Offer	Size
November	€7950	88	€8150	44
Week 49	€7900	88	€8250	66
Q1	€7475	132	€7575	132
Q2	€7000	132	€7200	66

Irish Butter

Period	Bid	Size	Offer	Size
November	€7650	44	€7900	88
December	€7400	44	€7750	110
Q1	€7400	132	€7850	132

Polish Sweet Cream Butter

Period	Bid	Size	Offer	Size
Nov-Dec	€8000	44	€8950	44
Q1	€7300	132	€7750	132

On the cheese front, it’s crickets. We’re constantly probing for updates, but everyone seems to be in "wait-and-see" mode. Postponing purchases has been a winning strategy for many recently, so it’s no surprise they’re sticking to it. It’s quite remarkable how the cheese market remains steady even while fat and protein markets are on the rise.

Our regular cheese partners generally agree that spot trading is currently the safest route to avoid losses. The cheese market has charted its own path this year, seemingly detached from butter, SMP prices, and best valorization practices. However, even in the cheese sector, fundamentals ultimately drive prices, and those fundamentals are undeniably bullish in the long term.

Looking at the indications from our buyers for both products, we hardly see any changes.

Gouda

Period	Bid	Size	Offer	Size
Nov-Dec	€4300	44	€4600	44
Q1	€4250	132	€4500	132
Q2	€4100	132	€4500	132

Mozzarella

Period	Bid	Size	Offer	Size
November	€4150	44	€4300	44
Nov-Dec	€4150	44	€4300	88
Q1	€4150	132	€4350	88

Turning to the powder market, the bullish trend continues. The recent GDT Pulse saw a significant uptick for both SMP and WMP, reinforcing the optimistic sentiment from the previous GDT. In the Middle East, Soummam is already in the market, and rumors are swirling that ONIL will join soon. In the U.S., NFDM prices are on the rise, and with the dollar strengthening against the euro, export opportunities are only increasing.

Within the EU, we’re seeing traction as well. Q1 prices for SMP Codex have traded through our books at €2,650, with demand steadily increasing. Prices for non-standardized butter are up on the offer side, and now bids are beginning to catch up.

In the FCMP market, prices are also shooting up. With high cream prices, strong butter demand, and a bullish GDT Pulse, it wouldn’t be shocking to see FCMP prices back at €4,400 in the blink of an eye.

Product	Origin	Volume	Period	Price	Incoterm
FCMP	IRL	88	Nov	4450	FCA NL
SWP	Spanish	150	Nov-Dec	975	FCA SP
D40	Spanish	200	Dec-March	1025	FCA SP
Codex BigBags	EU	200	November	2550	FCA FR
SMP Codex	Belgium	100	November	2575	FCA NL
FCMP Instant 2024 production	EU	100	November	4220	DAP NL

We would have the following bids

Product	Origin	Volume	Period	Price	Incoterm
FCMP BigBags	EU	96	Jan	4220	FCA NL
SMP Nonstand	EU15	100	Oct	2550	DAP NL
SMP BC Spec	EU	300	Q1	2650	FCA
SMP Codex for ONIL	Limelco	100	November	2550	FCA

Conclusion
The markets are pushing boundaries, especially for cream and butter, with no signs of a cooldown just yet. Buyers' strategies of postponing purchases may have worked so far, but with the fundamentals still pointing bullish, we’re in for an interesting end to the year and start to Q1.