International Events Without Much Impact

The first two trading days have been relatively active on our side. With Gulfood in full swing, today’s GDT event, and an ONIL tender in play, one might have expected a quieter start to the week. Yet, the market has shown decent interest. Butter and cheese have both seen solid activity, and even the powder markets have been livelier, with increased bids and offers. We expect these markets to align further in the coming days. However, let’s be clear—this isn’t because market fundamentals have suddenly become crystal clear. In fact, it may well be the opposite—a slightly distorted market picture seems to be pushing volumes. The broader sentiment still leans weaker, but let’s not ignore a few bullish signs lurking in the background.

First, checking in with our partners in Dubai, the sentiment appears... stable. Buyers aren’t exactly talking the market down aggressively, but producers also seem reluctant to predict any significant upside. Surprisingly, cheese expectations are leaning bearish, while butter remains stable to slightly bullish. As for powders, the tone is undeniably more bearish. Even before today’s GDT results, the Gulfood floor was flooded with producer offers (although on the high side), while buyers seem perfectly content standing on the sidelines. Overall, the international mood is—as we said—stable.

Now, onto our second major event: the GDT. Our expectations were for a stable to slightly bearish outcome, and with a -0.6% result, that prediction was pretty much on target. That said, we certainly didn’t expect butter to jump 2.2%. The strong price on NZ butter caught us a bit off guard. AMF corrected slightly down (-0.8%), while Mozzarella prices only inched lower. On the powder side, things were a bit more decisive. WMP held steady with a minor -0.2% decline, but SMP was hit harder, down 2.5%—a bit worse than expected. European SMP prices, in particular, came in weaker than forecast. With Arla pricing around €2,400 and Solarec just over €2,500, the gap between EEX futures and physical prices is becoming increasingly difficult to rationalize.

Our third international event: the ONIL tender. Typically, once ONIL enters the market, we see some upward momentum on prices, followed by a post-tender correction. This time? Not so much. In fact, there wasn’t even a meaningful bullish impact to speak of. The market doesn’t seem to anticipate any real price movement, and expectations remain aligned with the GDT outcome—sideways trading. So far, no official price levels have been reported.

As for the biggest international risk? It’s not dairy—it’s the White House. Fortunately, with attention currently directed at the Ukraine-Russia conflict, there doesn’t seem to be much time left to impose new tariffs or pressure international trade partners. However, even without the US government, the U.S. dairy market is clearly looking for ways to offload its stocks. With domestic butter prices continuing to slide, more U.S. butter is surfacing in international markets. On the SMP side, while we haven’t seen direct offers ourselves, an increasing number of contacts report losing business to U.S. suppliers—suggesting that American producers are undercutting EU prices.

Butter: Bulls Fighting Back

Butter prices had been following a predictable downward pattern every Tuesday since Week 3. This week, however, that streak was broken. Cream sellers appeared less eager to push the same volumes as last week, easing some of the pressure on prices. After today’s GDT, EU prices firmed up on EEX, followed quickly by buyer interest on our side. No, prices didn’t skyrocket, but the bulls certainly seem to be regaining some confidence. As soon as bids moved down, offers popped right back up. We brokered some Irish butter for May-June at €6,775 and some NL/DE/BE butter for Q2 between €6,800 and €6,830. Some may argue this hardly qualifies as bullish—but calling it bearish seems like an even greater stretch.

Sellers seem to have stepped back from the market, while buyers can bid as followed

• 6 loads of NL/DE/BE fresh/frozen butter on Q2 at € 6825
• 6 loads of Polish Sweet Cream butter for Q2 at € 6650
• 6 loads of NL/DE/BE fresh/frozen for Q3 at € 6875
• 6 loads of Irish Lactic for Q2 at € 6750 FCA Ireland

Cheese: More Sellers, More Pressure

The cheese market is showing signs of life. After weeks of dormancy, both buyers and sellers appear to have woken up, deciding it’s time for some action. Gouda prices are slipping slightly to €4,240, while Mozzarella sits at €4,000. The big shift? Sellers are finally accepting bids that have been lingering for weeks. Consistent with the GDT outcome, we’re seeing some added pressure. Producers seem to be holding a bit more stock, and with butter prices declining, cheese production appears to be ramping up. And, as one contact put it, "Producers are calling for a bit of chit-chat about the weather and the ‘stable’ market, only to wrap up the conversation with... ‘By the way, we might have some extra volumes for March if you’re interested.’"

Powders: More Pressure

On the powder front, things are looking heavier. SMP prices are under increasing pressure, dragged down by declining demand. More non-standardized and Codex offers are appearing at lower levels, but the bigger concern is the reluctance of buyers to step in. With peak production season ahead and hesitant purchasing both within the EU and internationally, it’s hard to paint anything other than a bearish picture. The real question now: Will major international buyers return if prices dip below €2,400, as they have in previous months? Lower demand across multiple industries suggests that’s far from a certainty.