On the Edge of Stability

The first three trading days of this week have been lively — especially in butter. Over 800mt changed hands via GFD, putting fats squarely in the lead. Prices? Sideways. But cream, quotations, and futures are edging higher, suggesting bullish undertones beneath the flat surface. Meanwhile, cheese is beginning to creak under pressure. Around 150mt traded — all at lower levels. More product is surfacing, but buyers seem hesitant. Sales are weak, and the floor is giving way. As for SMP… we’d love to stay bullish, but reality has a different mood. With 300+ mt traded at lower levels, we’re forced to admit: we’re not there yet. Product availability is increasing, the GDT was weak, and export demand remains sluggish — not helped by a softer USD. SMP isn’t just sliding; it’s stumbling.

So, where does that leave us?
Fats are up, cheese is softening, and SMP is cracking. Is the overall market still in balance?

🥛 Liquids: Cream Rising, SMC Retreating

The liquid market remains… balanced, but not without undercurrents. Cream is pushing up — particularly in Eastern Europe, where prices touched €8950. But in Germany, Belgium, and the Netherlands, the range remains familiar: €8750–€8800. Raw milk holds at 53ct, but SMC is starting to slide. We heard whispers of €1650 FCA France, though €1750–€1800 is a more realistic range by end of day. The tightness in the market persists. But for how long?

Some suggest that German calving patterns have shifted post-Bluetongue. That might mean year-on-year deficits hang around for a few more weeks — though the peak might not spike as high. Instead, it could stretch longer due to delayed calving. As a result, forward premiums on dairy commodities are fading. The longer-term view? Balanced, but foggy.

🌐 GDT: Weak, Except Butter

This week’s GDT sent another bearish signal:

• Overall index: -1.0%
• Mozzarella: -1.9% to ~€4150
• SMP: -1.3%
• WMP: -2.1%

Confidence in sustained price strength is clearly lacking. Especially for powders, demand appears soft and buying interest for longer periods is limited — especially at a premium to spot. Butter, however, continues to hold its ground. While Solarec disappointed slightly at €7430 avg, Kerry surprised on the upside at >€7300. The forward curve into the NZ season is highly backwardated, with the gap between C1 and C6 now $1200 — hardly a vote of confidence in future strength. Meanwhile, AMF dropped 1.3%, widening the gap with butter again.

🧈 Butter: Steady & Firm

Let’s talk numbers:

• Arla (SE/DK) traded €7300–€7350 for July/August
• Solarec covered June–October at €7400–€7425
• Irish butter: €7300 FCA IE and €7350 FCA NL

The debate among market participants is alive and well:

• Bulls point to high cream prices, light producer sales, and increased futures activity
• Bears point to rising stocks, light end-user buying, and strong availability from traders

Our view? Sideways — unless milk surprises us. If volumes stay tight, Q4 doesn’t need to rally like last year…
…but it also doesn’t have to collapse.

We start our day with offers

• 6-9 load of NL/DE/BE fresh/frozen for Q3 at € 7400
• 3 loads of NL/DE/BE for June at € 7350
• 4 loads of NL/DE/BE for July at € 7410
• 9 loads of Irish butter for Q3 at € 7375
• 10 loads of Arla DK/SE for July/August at € 7365
• 2 loads of Polish Lactic Fresh for June/July at € 7450

We are lacking bids close to the offers, but to put our buy side in context, we can bid:

• 6 loads of NL/DE/BE fresh/frozen for Q3 at € 7300
• 3 loads of NL/DE/BE for June at € 7250
• 4 loads of NL/DE/BE for July at € 7300
• 3 loads of Irish butter for Q3 at € 7250
• 4 loads of Arla DK/SE for July/August at € 7250
• 2 loads of Polish Lactic Fresh for June/July at € 7200

🧀 Cheese: Bearish Whispers Get Louder

The cheese market is beginning to show signs of softening. More June product is available, and July allocations aren’t exactly inspiring confidence. End users are pushing some June volumes forward into July, and for the first time this season, Gouda is starting to age — not a great sign. We traded Mozzarella just under €4200 DAP NL, with sellers lining up around that same level. On the Gouda side, we moved a few loads at €4220 for prompt loading, but buyer enthusiasm is clearly cooling.

What's fueling this bearish shift?
That part is still speculative. Some point to increased availability from peak milk, which — if true — may mean the pressure lifts again come August/September. Others cite a slowdown in food service demand and stiff export competition, both of which could drag prices lower. If the latter holds, we may head into the summer with growing inventories and aging product, just as the market typically winds down. Not ideal.

We expect to start with the following offers

• 4 loads of Mozarella for June/July at € 4180 FCA NL/DE/DK/BE
• 4 loads of Gouda 48% NL/DE at € 4265 for June, beginning July

On the buy side we have a bid for 7 loads of Mozzarella from July towards October at € 4100 FCA NL/BE

💨 SMP: Slipping Below Expectations

A market with little room to fall... is doing exactly that.

On the SMP front, offers continue to roll in — from both Codex and non-standardised material — but buyers remain scarce. With forward prices from producers now drifting lower, cash-and-carry strategies only make sense at even softer spot levels.

The latest GDT tells a similar story:
SMP forward prices for Aug–Nov are flatlining around €2400 / $2800. If the USD keeps weakening and global demand doesn’t return soon, the Q3–Q4 outlook won’t be winning any optimism awards.

This week, we traded German Codex at €2290 DAP NL, while UK non-standardised SMP was offered and traded around €2330 FCA UK. Buyers looking to hedge into Q4 are targeting €2350, but sellers still hope to squeeze out €2400. But right now, hope is not a strategy — and buyers know it.

🔍 Final Thoughts

The market isn’t falling apart — but it is fraying at the edges. Butter holds its ground, supported by firm cream and decent trade flows. Liquids remain steady, though cracks are showing in SMC. Cheese is softening under the weight of heavier stocks and cautious demand, and SMP is under real pressure with few lifelines in sight.

The fundamentals aren’t disastrous — but they aren’t inspiring either. Demand is tentative, futures lack conviction, and forward pricing is showing signs of fatigue. If milk flows stay tight, the market may muddle through the summer. But if volumes pick up and demand stays cautious, the tone could turn decisively weaker.

For now, balance remains — but only just.