Sluggish demand for liquids spreads doubt on commodity markets

The market remains very uncertain, and in an uncertain market, liquids are leading the way. We wrote about it in our update last week which you can read here. And with sluggish demand for liquids and negative sentiment from GDT, the commodity markets are correcting a bit back down again. We see the hesitation with our sellers to sell as the uncertainty surrounding demand and supply remains high, but the determination that we see with our buyers grows that lower prices are inevitable. And as sellers slowly lower their offers, buyers are one by one pulling back their bids. 

With a quickly declining French milk intake, hot weather and usually strong demand for fresh products around this time of year, we expected the market for liquids to pull the market up this week. But with cream prices stuck between € 5300 and € 5450,- we don't see a market panicking to buy. The same can be said for the SMC market. We hear prices between € 1900 and € 2050,-, and nobody pulling on the demand. Raw milk is trading between 34-37ct.

But the biggest issue we see is that stocks are starting to become a problem. We see sellers pushing for June/July offtake for butter and smp as warehouse capacity is becoming a bigger issue and financing issues start to be a part of the problem. It also feels like some still carry stock that is hedged against futures, but these hedges need to be unwinded. Traders that sold futures and bought physical now all need to find a buyer for the physical product while at the same time looking to buy back their futures. The effect? No buyers for physical products, no sellers for futures...

How the market should trade out of this? If the markets cant find a way to close this gap, time will!