Short Update 11th of December

The first two days of this week have been a near-repeat of last week. We’re seeing more pressure on all products, yet sellers are doing their absolute best to keep prices steady. Butter prices remain the most constant, holding firm through December. It’s quite remarkable (or maybe not?) how low overall market activity remains. In previous years, November and December were buzzing with activity, but 2024 seems determined to be anything but normal. From our perspective, this inactivity plays into the hands of those waiting for lower prices—each silent day adds more pressure on the supply side.

The first visible stress is emerging in the spot market for liquids. Although we haven’t heard much about raw milk or SMC, cream sellers appear to have woken up early this week. There’s a wide price range: early next deliveries still hover around €9,500, while Christmas and New Year’s weeks have already dipped below €8,000. This scenario could open the door to producing “Christmas Butter” at around €6,700.

Butter: Make It or Break It Moment

Not to add extra pressure, but this week feels like a “make it or break it” moment. If producers manage to keep prices stable this week and next, we might see Q1 buyers return before Christmas, potentially confirming slightly higher prices. If they don’t, well...we might be looking at two or three weeks of rapid declines as the market searches for a bottom. Today, most of our butter sales settled around the €7,000 mark. German butter hit the highest price at €7,300, while Irish butter found the lower bound at €6,750.

We think the butter market will focus on two key drivers: cream and quotations. The market feels heavy, and a number of traders tell us they expect prices to drop another €1,000 in the coming weeks, only to rebound slightly after the first weeks of January. If cream prices slip well below €8,000, we might see spot offers from Poland and Germany dip under €6500

Quotations will also be crucial. Last week taught us how surprisingly high quotations can move the market, but we’d be genuinely amazed to see a repeat. From what we hear, German producers have offered frozen goods at €7,000–7,200 for December and fresh butter around €7,600. This points to quotations roughly €600 lower than last week, mirroring the Dutch correction. The French? Well, we’re not sure, but a modest drop seems likely. The Dutch have already edged down, so stable-to-slightly-lower quotes would make sense. If EEX prices average around €7,500, that could affect EEX futures and, coupled with lower cream deals, inject a bit more liquidity into both physical and futures trades.

Cheese: Finding Buyers

Cheese prices remain on the weaker side, but at these lower levels, we finally see a flicker of interest. We brokered a small deal for a truck of Gouda for next week’s loading at €4,180. For the first time in weeks, buyers are creeping back in—albeit at rather humble price points.

For Gouda, buyers are hoping to lock in trades at €4,150 for Q1, after initially showing up at €4,000. Mozzarella buyers have nudged up to €3,700, while sellers hold their ground at €3,850. Even Emmental buyers are returning, aiming to strike deals around €4,900 for Q1.

Powders: Bottom Buyers

As anticipated, lower prices are luring buyers back into the powder market. After some downward moves, we’re seeing a cautious resurgence in demand—though let’s be honest, they’re bargain-hunting. Who can blame them? Cheap SMC, a weaker GDT Pulse for SMP, and plentiful offers don’t exactly scream “bullish.” For older SMP, buyers are hovering around €2,400. For non-standardized SMP, they’re willing to stretch slightly higher, around €2,450.

And there you have it—another “quiet” day in 2024’s dairy world. Stay tuned!