Update 20th October: Breaking the Markets

Everyone is on their way back from the SIAL and they are taking back their experiences and their stories. And although we saw many smiling faces and happy people we can't see that happiness reflected in the market sentiment.  It seems some have forwarded dark clouds to the sales and purchases departments and the sentiment on the markets starts to become more and more bearish. The effects of the SIAL and the weaker GDT are creating a perfect storm for a sharp correction. We see a similar move as we have seen last year in October, but the opposite way around. Last year we increased dairy prices by € 1000,- in a month, it is not unlikely that we will lose € 1000,- in the weeks ahead. 

The weaker sentiment was first visible in the market for liquids. Cream trades lower and at the end of the day we heard trades as low as € 7920,-. SMC traded quickly a good bit lower to levels of € 2700,- and we hear French SMC even as low as € 2500,-. Raw milk traded between 55ct and 58ct it seems. It seems to confirm our prediction that producers are trying to keep out as much product out of their products as possible.

At 12:00 the quotations came out for butter and SMP and we saw EEX quotations correct sharply down. Futures immediately traded lower as well as most participants were waiting for these to follow. We hear butter futures as low s € 6170 in Q1 and SMP futures as low as € 3260 for H1.

Physical products followed at the end of the day as producers seem to be convinced as well that these record-high prices are not sustainable in a market where consumers are faced with record-high inflation and export markets starting to come to a halt. Looking at other commodities we see world wide we think a correction is needed to get back demand.