Eyeing the Egde

Let's keep it brief today (no, seriously this time 😉). Yesterday, the market continued its steady, albeit cautious, climb for Q1 prices. The spot market for liquids and butter remains tight, with prices hitting unprecedented highs. As we edge closer to the year's end, the fireworks have already started, though there's growing skepticism about how long these sky-high prices can last. After all, "the higher we go, the closer to the top we are!"

Spot Market Highlights:
Liquids are breaking records. Raw milk in France is pushing an eye-watering 80 cents, while the Benelux market is hovering around 65 cents. Cream prices for Benelux deliveries are flirting with the €11,000 mark, with French deliveries not far behind at €11,500. Meanwhile, SMC remains stubbornly flat at around €2,200. Despite initial disbelief, the market is now coming to terms with the likelihood of sustained high cream prices, with Q1 buyers sniffing around between €8,800 and €9,000 DAP.

Butter's Rollercoaster Ride:
Closer-term butter prices are also on a steep climb. German, fresh, and Polish butters are in demand, but those inquiring are getting heart palpitations at quotes well over €8,500 for fresh NL/DE/BE butter and just under €9,000 for Polish. We haven’t brokered any deals at these lofty levels yet, but it’s likely we'll see the same buyers circling back soon, only to find prices have either stayed firm or nudged even higher.

Meanwhile, the French quotations committee us a small smile when prices for butter came out. One partner called it a "what were they thinking?" moment. After a two-week hiatus, the French posted their butter price at €7,420, while cream prices in France are soaring past €11,000. We’d be more than happy to offer some tips to our French colleagues to align their pricing closer to the German and Dutch levels of €7,950-€8,150.

Looking Ahead to Q1:
Butter prices for Q1 continue to trend upward, with December firmness likely to spill over into January. We brokered some significant volumes between € 7550 and € 7625. Demand for January deliveries is rising, with bids creeping up to €7,700 while offers edge towards €7,850. But, as prices climb, so does market scepticism—how much longer can this rally sustain? Buyers are ignoring the latest offers, expecting the market to cool down after Christmas. However, with the climate changing, it usually only gets really cold in February.

Cheese: The Slow Grind Upwards
In the cheese sector, buyers are gradually raising their bids, with mozzarella now touching €4,225 for Q1. Gouda and Edam bids have also nudged higher, though sellers are holding firm, buoyed by rising fat and protein prices. It’s intriguing to see cheese prices still lagging behind the overall market trend, though, to be fair, they've been marching to their own beat for months now.

Powder Market Picks Up Steam
The powder market isn't staying behind, either. We recently brokered 200MT of older SMP at €2,400-€2,500 DAP/FCA NL, while Q1 prices are on the rise. However, buyers are understandably cautious—too many times, they’ve seen a post-Algerian tender price spike only to watch it deflate shortly after.

But perhaps this time, the cards are dealt a bit differently. There’s clear demand from export markets, a weaker euro boosting EU competitiveness, and stronger prices in the US giving EU producers an edge. Who knows—next week’s GDT might just add the extra spice the EU powder market needs to finally break out of its long-lasting price rut.

In conclusion, while the market is riding a high wave across most products, the underlying doubt and cautious buying behavior hint that this excitement might not be endless. Keep your eyes peeled for Q1—there’s still room for surprises, and only time will tell if we’re truly approaching the summit.