The Best Wishes, and a Bullish New Year!

After a three-week break, we returned yesterday to find the market more or less where we left it. SMP prices are slightly under pressure, cheese is trending sideways, and only butter seems to have hopped a step higher. But let’s kick things off by wishing everyone the best for 2025! We’re grateful for the fantastic partners we worked with in 2024, and we hope to welcome even more in this new year. With the year only a few days in, we’d like to share our initial observations.

GDT: A Bearish Forecast

The GDT looks set for a weak start to 2025. SGX futures indicate lower trades in all major categories except butter. We still expect EU butter to perform better than most anticipate, but NZ butter could disappoint yet again. For SMP and WMP we expect market to correct down between 1-3%, for cheese, we expect a similar correction. We’d be pleasantly shocked to see a bullish GDT outcome strong enough to light up the market.

Liquids: Good Prices Suggest More Milk

Turning to the liquids market, the spot market appears to have softened slightly. Due to a few glitches at some major plants, raw milk prices in the spot market came under pressure, with Benelux prices hovering around 40 cents. We’ve also noticed that most co-ops trimmed their milk prices to farmers, reflecting the dip in commodity valuations at the close of 2024. Cream prices for this and next week are reportedly between €8000 at the low end and €8300 at the high end on an FCA basis. So far, we haven’t heard much in terms of SMC trades.

In general, most liquid traders expect milk volumes and content to climb over the next few weeks. Relatively high payout prices combined with cheaper feed costs make it profitable to push more milk than last year. Early indications from Ireland also point to stronger milk collections compared with 2024.

Butter: + €300 in the Last 3 Weeks

Butter prices have climbed quite substantially over the past three weeks. When we stepped away, Q1 prices were around €7000, while today’s January levels sit at €7300. Q2 trades for NL/DE/BE butter ended last week around €6700 and rebounded to €7000 yesterday. Irish butter currently sees offers around €7150 with bids just below.

Frankly, these higher prices have taken us by surprise—especially since cream prices traded lower and butter prices haven’t followed suit. Current cream prices should offer the possibility to produce butter around € 7000,-. Perhaps futures and higher quotations are keeping buyers engaged at these elevated levels. The question in the days ahead is whether cream prices will drag down butter or if butter demand will pull cream up. We expect clarity on this—hopefully by tomorrow. Quotations are expected to correct down what might impact the quotes we see on futures.

On the GDT, we expect to see slightly higher butter trades compared to the last event in 2024, potentially exceeding €7200–7300 vs. the previous close at €7000–7100. A more bullish outcome could spark additional trades at these higher price points.

For the moment, we anticipate buyers for:

• 2 trucks of NL/DE/BE for Jan at €7250
• 4 trucks of Irish summer-profile butter for January at €7100

Yes, we realize this is a very modest market. But judging by all our calls yesterday, nobody seems ready to buy or sell before gathering a bit more intel on demand and supply.

Cheese: Sideways With a Floor

The cheese market has spent the last few weeks doing what it did for much of 2024: moving sideways. After nearly hitting highs of €5000 in October, cheese retreated to just under or just above €4000, roughly where the market started in 2024. Demand appears steady, and production remains at comparable levels.

From conversations with a few cheese-market partners, it sounds like higher commodity prices are only now making their way onto retail shelves. The big question is whether these higher retail prices will curb demand. For now, the market appears balanced, keeping Edam, Mozzarella, and Gouda at stable levels.

We plan to start the day with:

• An offer for 6 trucks of Mozzarella for Q2 at €4000, with a bid of €3800 for the same volume
• An offer for 6 trucks of Gouda for Q2 at €4175, with a bid just below €4000 for the same volume

Powders: Low Activity

The overall trade activity remains subdued in these early weeks of the year, with little urgency on either side to move product. Today’s GDT (being the first event of the year) will hopefully shed some light on where prices are heading—because, frankly, a little direction wouldn’t hurt right now. While we saw a wide spread in SMP offers late last year, this week has kicked off with several offers, all near the €2500 mark.

WMP has been on a downward trend over the past four GDT events, dropping about $235 from its peak roughly a month ago. Among other factors, this decline is likely the result of improving milk production in New Zealand compared to the previous season. Meanwhile, Chinese import demand has eased somewhat, thanks to earlier-season purchases hitting the market just in time for the upcoming Chinese New Year festivities—because what better time to put negotiations on hold than right when the holiday’s at your doorstep?

SMP has been declining as well since November, showcasing some interesting twists. New Zealand shifted from being the world’s cheapest origin for most of 2023 and 2024 to recapturing its premium over European product in recent weeks.

Meanwhile, EU milk supply is on the rise. The bluetongue virus no longer seems to be a major roadblock, and Oceania’s milk flow continues to climb. Ireland is enjoying a particularly strong rebound (+15%), recovering robustly after a lengthy period of decline. Growth also remains positive in countries like Poland.

We expect to start of the day with:

• an offer for 96mt of UK/NI WMP fresh at € 4200 FCA NL
• an offer for 50mt of Uelzena SMP Fresh for January
• an offer for 100mt of F+S SMP Fresh for Janaury

We are happy to be reconecting with everyone and aim to update you over the next weeks again with the latest market trades, market level offers and bids and some insight on what we think is to be expected. Here’s to an exciting (and hopefully profitable) year ahead. Cheers to navigating 2025 with a touch of optimism…and just a little eye-roll at every market surprise!