Bearish Butter and Stuck Markets

Yesterday was all about butter. With over 700MT changing hands, it's safe to say the market is inching lower once again. Those accustomed to trading butter may feel the movement is sluggish, but a broader view reveals a consistent downtrend—roughly €100 per week since week two. As more sellers step in, the once-tight supply dynamics are beginning to ease, bringing back a semblance of normalcy. However, cheese remains an entirely different story—caught between scarce availability and comfortable demand, leaving little room for movement. Meanwhile, the powder market is showing increased activity on both the buy and sell sides, yet closing deals appears to be more challenging than usual. Beyond butter, the broader dairy market seems stuck in neutral.

Liquids: Weak and Wavering

The liquid market remains soft, though sentiment varies wildly depending on who you ask. Cream prices initially traded just below €8,000 FCA early in the day, only to rebound later, landing between €8,100 in Eastern Europe and €8,200 in Western Europe. That said, traders agree that demand at the higher end feels sluggish, hinting at another potential decline. Raw milk prices continue to drift lower, though only slightly compared to last week, with most volumes trading between 48 and 50 cents—essentially unchanged. Meanwhile, SMC remains steady around the €2,000 mark, holding firm despite broader market weakness.

Quotations: Bearish Signals Creeping In

Yesterday’s quotations leaned bearish. The French, in their usual fashion, opted not to quote butter, but the average European butter quotation still dipped to €7,366—down €105 from last week. However, it remains roughly €300 above the current spot market. SMP quotations also softened slightly, down a negligible €4 on average to €2,513, hardly enough to make waves but still at the high end of market expectations.

Export Markets: Forget Tariffs, It’s the USD That’s the Headache

Conversations with export partners suggest that trade conflicts and tariffs, while always looming in the background, are not the immediate concern. Instead, it’s the wild swings in the USD that are making price management a nightmare. Over in the U.S., butter prices continue their rapid descent, fueled by an abundance of cream and swiftly building stocks. Given these dynamics, the U.S. market looks set to mirror the EU in the months ahead. With 82% U.S. butter trading around €5,500, it’s becoming a formidable competitor on export markets. While EU stocks are not (yet) a problem, sluggish exports coupled with rising imports could shift that balance sooner than some may expect. On the other hand, NFDM and cheese prices in the U.S. remain firm—so if the EU follows America’s butter trajectory, let's hope it manages to hold its ground on cheese and powder.

Butter: Another Dip, Plenty of Buyers

The butter market slid further yesterday, pulled down by cheaper cream. More producers are stepping in, seemingly resigned to the trend—except, of course, the Irish. A few conversations suggest that Irish producers see no reason to offer butter below €7,000, despite futures and physical prices dipping below that threshold. Either they’ll be the only sellers left standing in a few weeks, or they’ll be in a market with almost no buyers. From what we can observe, a growing number of end users are locking in coverage, with large portions of Q1 and Q2 demand already secured.

That said, not everyone shares our bearish outlook. In fact, the bulk of feedback suggests an imminent price rebound, citing low stocks and sustained demand for fat and cheese. This argument is supported by the presence of plenty of buyers for Q2 in the €6,700–€6,800 range. It will take significant volume to break that level of support. So, in all fairness, perhaps we should clean our bearish lenses a bit and acknowledge the bullish signals in play. But somehow we just can't shake our bearish forecast feelings.

We expect to start the day with

• a bid for 4 trucks fresh German butter for Feb at € 7000
• a bid for 4 trucks NL.DE/BE for March at € 6950
• a bid for 6 trucks NL/DE.BE for Q2 at € 6825
• a bid for 6 trucks NL/DE/BE for Q3 at € 6850
• a bid for 6 trucks Polish Sweet Cream for March at € 6800
• a bid for 3 trucks Polish Sweet Cream for Q2 at € 6700

We expect to have sellers for

• 4 trucks NL/DE/BE for Feb at € 7100
• 4 trucks NL.DE/BE for March at € 7075
• 6 trucks NL/DE.BE for Q2 at € 6890
• 6 trucks NL/DE/BE for Q4 at € 6975
• 3 trucks Polish Sweet Cream for Q2 at € 6850
• 3 trucks Polish Sweet Cream for March at € 7050

Powders: Debates, Discussions and Doubts about Demand

With nothing new to report in cheese, we focus directly on powders. Yesterday brought yet another round of engaging discussions with our partners in the powder trade. Some fully agree with our slightly more bullish stance on SMP, while others see the exact opposite. And with such starkly opposing views, you’d think the market could find a level where both sides meet. Unfortunately, it seems our buyers are still firmly wearing their bearish glasses, while the sellers are looking through their ever-bullish lenses.

This divergence is nothing unusual, but it does highlight how market dynamics have evolved. The real difference appears to be in perspective—sellers with a strong EU focus see a bearish market, citing increased production and sluggish domestic demand. Meanwhile, those with an export-oriented view see more opportunity, positioning the EU as the most competitive global supplier. We tend to align more with the export camp, recognizing the internal demand challenges but believing that external markets will provide strong underlying support.

ONIL is expected to be announced in the next two weeks, and we wouldn’t be surprised if their presence gives EU prices the push they need to break out of their year-long comfort zone. We should still be able to start with the following markets.

We have buyers for

• 200mt SWP, €1100 , fresh 25kg bags with export docs
• 100mt SMP from Limelco fresh production at  €2430
• 100mt SMP codex mh 6-8 month old (no german) with halal cert €2400 fca NL
• 300mt SMP max 12 months old EU27  €2350 fca
• 100mt SMP Yew Tree 100mt, €2350 ex UK op feb

We have offers

• ⁠200mt SMP from Limelco fresh production on €2500
• 125mt non-stand min 35% as is, 6 months remaining shelf life, west eu, 25kg €2450 dap nl
• 300mt codex mh west eu, max 6 months old €2475