Relaxt Bulls on Fat, Relaxed Bears on Proteins

Two days in, and the dairy scene already has our heads spinning. On both the butter and cheese fronts, we sense a firmer trend—though, to be honest, there’s not much actual trade to back it up. Meanwhile, the protein side of the business is weighed down by weak demand. Some might find this firmer sentiment surprising; others see it as the natural continuation of a bullish pattern that started about a year ago. And even if we all vow to cut back on fats for at least two weeks (let’s be real: our resolve may not last), producers report that demand for good offtake remains solid.

GDT: Bullish for EU Fats, Bearish for the Rest

The first GDT event of the year wrapped up with a -1.4% result—so not exactly the bullish kickoff some might have hoped for. SMP fell by 2.2% and WMP by 2.1%, taking most of the traded volumes down with them. European SMP now finds itself around €2400–€2500, while New Zealand SMP still trades at a premium over EU product. On WMP, European product eased to around €4150–€4200, which is a bit lower than we’d expect from current market chatter.

Butter, on the other hand, gave the EU some reason to cheer, hitting levels above €7300, near the top of our anticipated range. AMF, however, dipped to levels that look highly competitive. At this point, EU butter is the most expensive butter out there—so you’d expect exports to slow and imports to pick up eventually. The €1000 gap we’re seeing is anything but sustainable, and regional demand doesn’t seem strong enough to pull NZ prices back up.

On cheese at the GDT, the biggest eyebrow-raiser was Mozzarella, which posted a price increase after six bearish sessions in the last seven events. Some see it as a needed correction, but with EU mozzarella trading around €3800 in recent weeks, that €4000 level feels pricey.

Overall, this GDT confirms a relatively bearish outlook for the next few months globally. Milk volumes look decent, and worldwide demand is… let’s call it questionable. But it seems the EU may be marching to a different drummer, especially on the fat side of the market.

Liquids: Sideways

Not much excitement to speak of in liquids. Cream prices hover near €8250, with reports of some deals dipping a bit lower and others edging a bit higher. Supply appears to be rising slightly, but the market is somehow soaking up those extra volumes. One trader summed it up best:

“Producers are playing hard to get, but there aren’t many buyers chasing them. Then again, sellers don’t mind playing this game by themselves…”

It’s telling that in a market with fewer buyers and more product available, sellers still manage to stay calm and confident.

Butter: Wide Ranges

Today brought plenty of chatter about butter, but not much action. Offers for frozen Irish, frozen Arla, and fresh French butter all land between €7300 and €7400, while buyers claim to find product around €7150–€7250 FCA direct from producers. With no pressing need to purchase, buyers are happy to wait and see if sellers start feeling the heat.

Speaking of the sales side, though, there’s no pressure… nor is any expected in the near term. Irish milk output is modest due to their season, Polish producers are in no rush to sell, and Germany prefers to build a little stock first. The Belgians might be slightly more open to deals, but overall, who caves first remains the big question. We initially bet on the sellers. If we had to pick again… well, we might just flip a coin.

In a wide market, there’s little for us to broker right now. We start the day with:

• 2 loads of Frozen Arla butter (SE/DE/DK, seller’s choice) FCA NL at €7350 for January
• 2 loads of Fresh French butter, FCA NL for Feb/March at €7350
• 2 loads of Belgian butter, early-Feb pickup at €7400
• 6 loads of Irish butter, FCA Ireland for Q2 at €7100

And we see demand for:

• 2 loads of Frozen Arla butter (SE, seller’s choice) FCA NL at €7200 for January
• 2 loads of Fresh Solarec butter for January at €7250
• 6 loads of Irish butter, FCA Ireland for Q2 at €6900

Cheese: Firming

Yesterday, we kicked off with a wide gap between cheese buyers and sellers, but saw some renewed buying interest as the day went on. True to form, as soon as buyers showed up, sellers seemed to pull back. With butter on the rise, many cheese sellers are feeling more confident and expect prices might firm up. Even though there’s little sign of increased demand, the scarcity of offered volumes is nudging prices higher.

The stronger-than-expected GDT cheese result cleared out the sales side and pushed sellers back to the drawing board to plan their next move. We start the day with:

• A bid for 6 trucks of Mozzarella for Q2 at €4000 (NL/DE/BE/DK origins)
• A bid for 6 trucks of Gouda for Q2 at €4150 (NL/DE origins)

Powders: SMP Down, More Activity for FCMP/WMP

WMP grabbed the spotlight yesterday, with buyers and sellers active around the €4,30–4,35 range for late-January loading. Some slightly lower offers around €4,275 for later production also emerged. SMP stayed quiet until GDT trading began to slide, sending prices downward. Pre-GDT bids in Southeast Asia sat around €2450–€2470 (FCA), but word on the street is they could ease even lower today.

Meanwhile, chatter about sweet whey powder is hovering near $1200 CFR for March shipments, with counters at $1275 CFR for April/May. Chinese buyers are largely sidelined with Chinese New Year around the corner and earlier-season product already en route, which likely won’t spark a GDT rally any time soon.

South American WMP is offered at around $4350 CFR into North Africa, in line with European price levels. So while WMP is holding firm, SMP is definitely feeling the heat. Tomorrow could bring changes—or just more excuses to keep our coffee (and spreadsheets) close at hand.

We begin with:

• 96mt of UK/NI FCMP fresh at €4200 FCA NL
• 50mt of Uelzena SMP fresh for January
• 100mt of F+S SMP fresh for January
• 1 load of instant FCMP from Belgium at €4275

Here’s hoping the rest of the week offers a bit more clarity—though if experience has taught us anything, we’ll keep bracing for the unexpected twists the market loves to throw our way.