Sellers Waiting for Buyers to Catch Up!

Yesterday was again a busy day from our side. We see that prices keep increasing, and especially on the future side of the market the buyer's appetite seems a lot larger than the seller's appetite. We hear trades for both SMP and Butter futures keep increasing and they are pulling up the offers we are receiving in the physical market. It is not unusual for buyers cant follow as quickly as sellers are increasing the offers so in the end the brokered volumes are not that big. 

The first signals from the market for liquids are very firm. Cream prices today traded as high as € 6700, up a good € 500,- from last week and the demand for SMC seems bigger than the week before, with the availability remaining the same. Only on liquid milk, we hear some contrary information. France is lacking milk and is looking for raw milk, but Eastern Europe seems to be having a hard time selling raw milk above 40ct.

We think the liquid market reflects the strong butter (cream) and SMP (smc) market and the sluggish cheese (more made from raw milk) market. The cheese market remains very sluggish although offered prices remain very high. We have a hard time finding buyers who are willing to take the next step. Weak CME prices and disappointing GDT results on cheese show the negative sentiment on the cheese side of the dairy market.

We also took a look at the GDT Pulse results. Compared to the GDT result of last week WMP prices increased a small $ 20,- per mt, but they are lacking a good $ 200,- compared to SGX October futures. The market bulls will point toward the increase compared to the previous Pulse event, and the bears will indicate not the whole volume got filled, suggesting demand is still not great.

All things combined, this week's start is still bullish, but the bears have some small indication they will hang on to to counter the bull's arguments that the market will increase further. We would suggest the same as we did in our previous updates, trade with care, and manage your risk.