Cucumber Time Boring?

The summer months are known for their boring market, low activity and low participation from sellers and buyers in the market. It normally means everybody has (and makes) time to do chores most of us postpone until the last time. Catching up with administration, archiving, following up on months-due requests from our quality and finance departments... In the Netherlands, we call this cucumber time. No major news to report, so we focus on the smaller stories. 

But this year the physical cucumber market seems to fully represent the way we experience this year's cucumber time in the dairy market. The image below represents the relative price movement of a cucumber in a supermarket in Germany. After peaking in May, prices are dramatically dropping due to the lack of demand and the overflow of supply. It shows consumers are aware of increasing prices and it impacts demand. It also shows producers jump on the chance of producing product that has a high margin.

Looking at today's dairy market we aren't seeing a typical "cucumber" market with low activity and low participation, but a very volatile active market. Prices have been slowly grinding down since peaking end of may/beginning of June but now the decline starts to accelerate. Because while buyers are starting their typical summer chores sellers still have a lot of selling to do! We see traders and producers chasing the remaining demand causing the last few buyers to aim at even lower prices, pushing down commodity prices further.

Speaking to buyers it seems most can't take advantage of the sales pressure as most indicate their needs for Q3 (and a lot as well for Q4) are covered and they can only take a look at Q1. It's not a matter of price they don't buy, it's a matter of need. We hear the first producers are offering to our export partners products on lower levels, but even outside of the EU demand is much harder to find. But without export business, it feels the EU market might break under the supply pressure.

Because in January this year, we saw that the EU producers could find plenty of outlets on the export markets to relieve pressure on prices. If they won't manage to do the same this summer, prices might correct below the levels seen in January/February this year. Looking at today's GDT pulse result export demand remains bearish.