Three different markets, but one fundament?

Yesterday the market showed all three faces we know, bullish, bearish and stable. Speaking to some partners we feel some don't understand what is driving the price action, and we are with them. It almost feels random what the price action on each day is going to be. Fundamentals don't seem to be important for now, sentiment is. And the sentiment seems to be determined by a small group.

The butter market the last few days felt like it was topping off, and yesterday the market dropped down again. Futures started to trade lower first after the physical market followed. The biggest drop can be found in Q2. In the morning we started with offers at € 5050,- and at the end of the day we saw the butter come down to € 4750,-. Prices in March also eased back a bit, but they didn't see such a big increase as Q2. But the bearish trend is clearly visible.

But looking at the cheese market we see a completely different picture. Without any offers, the buyers are accepting the higher prices. Today we saw Gouda for March trade at € 3300,- and our best offer, for now, is € 3400,-. The complete opposite move v.s. butter shows that these price changes are not caused by fundamental changes, but, as reported, by the balance between buyers and sellers that are active at the same moment.

Looking at the powder market we see a stable market. It seems the higher prices of € 2700-2800,- will not be accepted but around € 2600,- there is plenty of buying interest to be found. Looking at the world market we think the EU has some opportunity to get rid of some products if we keep prices around € 2600.

The most important market to watch is the market for liquids. We hear prices for raw milk are back at 34ct after peaking last week toward 37-38ct. SMC is also reported a bit down, but cream prices are still relatively stable. If these prices drop it would confirm (in our opinion) the still bearish fundamentals. This sentiment could cross quickly to the other markets.