Morning Update: Markets are searching for a floor

Yesterday the market did what it was expected to do, it came down again under the pressure of the liquid markets. The spot demand for raw milk, cream and SMC is down and the demand for commodities like butter, smp and cheese is disappearing as fast as extra milk is showing up. This all resulted again in a day of lower trades. 

Those who were still expecting some spot demand for the holiday season seem to capitulate and understand that warehouses across Europe are not only filled up with consumer electronics and clothes but as well with butter, SMP and cheese. For us, a clear sign that the market is due another correction is that the end users are not happy with the lower prices. Their warehouses are still filled up with unsold stock and they also need to write of value of their existing stocks. They would rather see the market a bit higher and come down only after they have used up their stocks.

Another variable that is changing the dynamics of the market for EU suppliers is the fact that the euro is back at parity against the USD. This is making the already unlikely export opportunities again more difficult. And with less demand on all export destinations, all major supply regions are targeting the same buyers causing more pressure on prices. Now that supply chain issues are a non issue at the moment the competition is as fearce as it has been before.