A Stable GDT to Balance the Market?

The first two trading days of this week have once again been active. With over 2,000 mt of product brokered through us, we are pleased to be assisting so many partners in securing their purchases and sales in this market. After several weeks of strong butter activity, powder trades have finally started to pick up as well. Lower SMC values are putting pressure on both the spot market and some forward trades, while cheap cream continues to weigh on butter for nearby positions, creating discounts against Q1 and Q2 sales. Although sentiment in the EU market has felt weak, there is at least some positive news to point to. The GDT corrected down only 0.8%, which may give EU sellers some breathing space and perhaps an opportunity to catch up with the fast-falling EU commodity markets.

Starting with the GDT results, the modest 0.8% decline was somewhat unexpected, although once the details are unpacked, it becomes clear that from a European perspective, there is little to call bullish. On the butter side, no bids were received for Solarec butter, and therefore, it did not trade. Its opening price of €5,750 appeared too high to attract any business. By contrast, New Zealand fat prices held firm, now sitting roughly €500 above EU market levels. This gap should give EU butter a competitive advantage in export markets relative to New Zealand, but compared to the US prices, EU levels would need to be corrected significantly lower. While one might have expected US and EEX levels to react with a slight bullish tone, local sentiment seems too bearish and held prices down for the time being. AMF prices dropped 1.5%, remaining heavily discounted relative to butter.

In mozzarella, the bearish sentiment lingers. With prices now dipping below €3,300, cheese still has room to trade lower. This aligns with the prevailing EU cheese sentiment, where trades in recent days have also been weaker.

Turning to SMP, we had anticipated GDT results below €2,200, but November contracts are still holding at relatively acceptable levels. For December, however, MH EU origin prices have fallen below €2,200, with our partners reporting even lower levels. Whether SMP can remain above €2,200 while SMC prices continue to soften is uncertain. On WMP, the correction was milder than forecasted, with the actual -0.8% drop faring better than our -2% projection.

Even so, the overall trend remains down. With the USD weakening further from an EU perspective, there is little room to call the situation bullish. Sellers may nonetheless see this GDT as a glimmer of hope—perhaps a chance for a recovery or at least a slowdown in what has been nothing short of a gruelling free fall in dairy prices.

Liquids Lower

Back to familiar bearish ground. Speaking with those active in the liquid market, there is little expectation of upside and instead a growing fear that prices could tumble further. While some export demand is present, domestic spot demand for butter, cheese, and SMP remains virtually absent. Factories are clearly trying to divert as much milk as possible away from commodity production. Raw milk traded yesterday between 40–43 cts, while cream slipped to €6,000–€6,100. SMC continues to show wide variability, with reported levels ranging from €1,400 to €1,900. Converting these liquids into commodities would yield butter just over €5,100 and SMP just above €2,000.

Butter: Market in Carry

The butter market has finally shifted into carry. After trading in steep backwardation for more than a year, we can now see a contango structure emerging. Spot butter today traded as low as €5,300. German producers are actively selling Q4 volumes between €5,300 and €5,350, while offers for Q1 sit around €5,450–€5,500. Along the forward curve, Q4 bids are seen around €5,300, Q1 between €5,350–€5,400, and Q2 slightly above €5,400. The carry is still too shallow to form a firm floor around €5,300, but we believe support will emerge once the market approaches €5,000–€5,100.

Our Irish partners, meanwhile, continue to wait for the Christmas rebound. Their offers, between €5,750 and €5,800, are even above Solarec’s failed GDT opening, yet producers there appear firmly in control of their positions and under no pressure to sell. Some suggest that the GDT may yet draw buyers in their direction, and as one of them remarked, “Selling lower later is always an option—there is no rush for now.”

After yesterday’s GDT, the market feels thin. Sellers are holding back, and buying interest is subdued. Demand only shows up at lower levels, reflected in the following bids:

• 2 trucks Polish sweet cream butter for September at €5,400
• 4 trucks fresh Irish/Danish butter for September at €5,300
• 220 mt NL/DE/BE butter for November/December at €5,250
• 264 mt NL/DE/BE butter for Q4+Q1 at €5,300
• 264 mt Polish sweet cream butter for H1 at €5,200

Cheese: Weak Demand

On the cheese side, demand remains soft, with little to no support beyond a few isolated bids. Our regular partner conversations confirm the same story: abundant supply and a shortage of buyers. The GDT mozzarella result is a fair reflection of this sentiment. We expect to see solid support just above €3,000, but getting there will likely require a few more lower trades before stability returns.

Current interest includes:

• 3 loads Carbery Mozzarella for Q4 at €3,300 DAP NL
• 3 loads NL/DE Gouda for Q4 at €3,200 DAP NL

Powders: Can GDT Give Support?

Powders performed better on GDT than we had expected, but a closer look suggests the outcome is not as strong as some headlines imply. While prices printed higher than forecasted, the settlement FX rate of 1.176 worked against the EU, with the EUR/USD now at 1.186, effectively costing EU sellers another €20–25 per ton. If the dollar continues to weaken, EU exports will face renewed challenges.

On the positive side, global buying interest remains active around the $2,600 level, which should offer some baseline support for EU SMP. Over the past two days, Linda has brokered more than 1,000 mt of powders, with SMP trading between $2,650 CFR and €2,130 FCA EU. Happy to engage at these levels, reach out to Linda and ask her to help you find the best deal in the powder market.

The key bearish weight remains SMC. Should buyer prices continue to fall, production volumes are likely to climb sharply compared to last year, further burdening an already heavy market.

Final note: while the market’s immediate outlook remains fragile and heavily supply-driven, both sellers and buyers are now positioning with more caution, waiting to see whether the current levels will hold or if further adjustments are unavoidable.