GDT Results Boosts Confidence Sellers

Yesterday was a more relaxed market compared to the day before. Most partners are waiting for new market impulses to make their decisions. With most German partners out of the office, we had a relatively quiet day, which was also reflected in the market for liquids. And with GDT on during the afternoon, we had a day to catch up with most partners. 

Looking at the results of the GDT we think most partners will find enough evidence to boost their market view for higher commodity prices. With a headline result of 4.4% up we clearly see a continuation of the bullish sentiment. SMP and WMP prices took the lead with 6.6% gains for SMP and 4.8% gains for WMP. We do see that there isn't much premium paid for the months ahead, the forward curve is remarkably flat. It seems that there isn't a lot of confidence among buyers that prices will increase much further.

The same forward curve can be found for butter. With a 1.3% gain, we still see a higher price, but the results also reflect the topping of the market we see in the EU and US. Butter (for now) seemingly has made most of its gains. AMF prices increased a bit more, and with 3.7% we see that the biggest premium is paid for November. The months that follow even show a slight discount.

The least-performing commodity was the cheddar. In line with US and EU trend, cheddar prices closed 4.8% lower and is now at the lowest point since December 2020. With cheddar prices this low (and EU and US prices also under pressure, we would not be surprised to see a shift from cheese production to butter/SMP production.

Overall the GDT results were in line with market expectations, so the question is if there will be a strong response from the buyers due to this headline result of 4.4%. At least our sellers have their confirmations that the demand on the export market remains firm and they have a good position in their negotiations with their buyers. From a buyer's perspective, they will point toward the flat forward curve, but in fairness, that is the best they can point at.