Bullish Surprise Party for Butter Buyers

Not everyone may share our view, but let’s be honest—the dairy market has been rather uninspiring lately. Prices are treading water, GDT tenders aren’t delivering much excitement, and the physical market remains largely stable. The one exception? The fat market, where cream and butter prices seem to change daily, keeping traders on their toes. However, things took an interesting turn on the SMP front recently. EEX prices have shown some larger moves, spurred by underwhelming results from the ONIL tender and a weaker GDT Pulse. Powder prices are feeling the pressure. Meanwhile, in a twist that caught some off guard, butter prices are making a notable climb. Some saw this correction coming a mile away; others—our more bearish butter traders—were caught by surprise as the bulls threw a bit of a party. And while all of this unfolds, cheese remains unmoved, marching to its own sideways beat. Plenty to unpack in today’s update!

Liquids

Starting with the basics, liquid markets tell an interesting story. The latest data from France and Germany is, frankly, disappointing. Both are lagging behind their already lackluster 2024 production figures. That said, we've been seeing weak numbers from these regions for months, yet somehow, final EU data still shows an overall YoY increase in collected milk solids. Diving into Germany specifically, despite lower milk volumes, commodity production—so crucial for our industry—continues to climb YoY.

Spot prices for cream have edged higher this week. The selling side is showing strength, with buyers reluctantly following. SMC prices are also trending upward, though with considerable variation between countries. For next week, cream sellers in Western Europe are quoting €8,350–€8,400, while buyers are hoping to secure deals between €8,150–€8,200 DAP. In Eastern Europe, trades are landing anywhere from €7,800 FCA (at the low end) to €8,000 FCA. Meanwhile, SMC sellers are emerging around €2,300 FCA France and Germany, while buyers remain cautious, targeting the low €2,100s.

With temperatures rising, milk production should respond accordingly. But until then, we expect spot prices for liquids to hold firm at last week’s support levels.

Butter: A €200 Jump – Let’s Call It a Party

Following higher cream prices, the butter market delivered an unexpected jump yesterday. Up until then, buyers were holding the line at €6,850 for NL/DE/BE butter. Then, out of nowhere, the market surged to €7,025, a €175 increase. The reason? Hard to pinpoint exactly, but mix together a shaky outlook, rising cream prices, and producers tightening supply, and you get the perfect coctail for a bullish surprise.

At this higher price level, sellers are starting to reappear—particularly from Ireland, Germany, and Poland. The closer we get to €7,000/mt, the stronger the selling interest.

If cream prices keep climbing, expect trades to continue at these higher levels. But if this is just a short-lived spike, well, then this party might wrap up before the guest of honor even arrives. As one of our partners put it: "The bulls may be celebrating, but if they get druk too much on these high prices, they might wake up tomorrow with a nasty hangover."

From the US, we continue to see plenty of offers. Salted butter is floating around $6,000–$6,100 CIF EU, while unsalted butter is priced between $6,300 and $6,350. Yet, buyers remain elusive. Similar offers are being reported for CIF Middle East and Asia. Anyone able to pivot to US butter could benefit from these discounts. And with CME butter prices still sliding, those discounts may get even steeper.

Cheese: Business as Usual (a.k.a. Sideways)

After a brief (if you could even call it that) correction last week, the cheese market is right back where it started: sideways.

Gouda offers for March have returned to €4,300, with Q2 bids hovering around €100 lower. Meanwhile, Mozzarella buyers are sticking to previously traded Q2 prices of €4,000, while sellers have nudged their offers back to €4,100.

We’ve spoken to plenty of market players, and the consensus is clear: don’t expect much movement. Prices seem locked in place for now.

Powders: Cracks Forming Under the Pressure

The powder market is feeling the strain. Increased supply is weighing heavily on prices, and it’s only the continued support for SMC that’s keeping things from completely falling apart.

EEX futures are signaling weakness, and a lackluster GDT Pulse certainly won’t help the bulls. Across the Atlantic, CME powder prices have hit their lowest level in a year—aligning with what we’ve been hearing about lower-priced US products making their way onto export markets. Recent US milk figures suggest January milk collection barely grew (+0.1%), but milk solids jumped +2.2%.

With global pressure mounting, higher EU SMP production, and weaker internal demand, the market is at risk of breaking lower. We’ve seen the €2,400 price level tested multiple times, and according to many industry players, that floor may not hold for much longer.

NZ, Australia, the US, and other key producing regions are flooding the market with product. The big question is: how much longer will buyers see current prices as a bargain before they start viewing all this excess powder as a burden?