Absorbing Peak Milk

Yesterday the market showed more of the same we saw in the previous weeks, although we must admit we are seeing steady buying activity for some commodities. The expectations that the milk flush would cause tremendous pressure on dairy commodities and thus cause lower prices don't really seem to materialize (yet). Somehow the market is absorbing the extra quantities better than a lot of our partners were expecting. So how long can the market buyers keep absorbing the additional product? Or have we seen a glimpse of what the future holds for us?

Looking at the market for liquids we should be seeing the maximum pressure in this week. France is peaking in its milk production and in the next two weeks, we should be seeing the Dutch / German peak. This while the weather conditions aren't favourable at for fresh consumption, yet! But yet under these perfect production conditions, it seems the prices aren't collapsing under pressure. Yes, we hear SMC concentrate trade as low as € 1050, but at the end of the day prices seem to be bouncing back up to € 1300,-. Cream prices, while under pressure are able to maintain a price of around € 6300 and prices for raw milk have been going back up to levels of 36/37ct in the BeNeLux. If the weather forecast keeps improving (as it should) we should be seeing more demand from the fresh industry, taking more pressure off the spot market for liquids.

Butter: Sponges at Lower Levels

Looking at the butter market we see that the pressure on cream did create a bit of pressure on butter prices. We heard some trades as low as € 5550 for Polish butter, but these prices seemed to be available only for a short time. With prices trending down we saw buyers returning to the market fast creating a solid floor. With over 450mt of butter trades from our side, we see the market is easily absorbing the additional volumes put on the market due to peak milk.

With trades for NL/DE/BE for May-June between € 5775 and € 5850 we see the market may be slightly lower compared to the days before, but with the low range of our prices we do see more buyers, and sellers aiming for the higher range of prices again. We also saw some trades for Polihs butter between € 5650 and € 5700 and we expect to see more buyers at the low end of these prices. For Irish butter, we traded a bit at € 5775 FCA Ireland, with bids now at € 5750 and offer back above € 5800.

Cheese: Looking for buyers, but not at a discount

We keep it short as there is little to add to the stories of yesterday, the week before and the month before that one. We still see sellers but we lack buyers. At the same time, all our sellers say the same, we are not under pressure and at slightly lower levels, the cheese finds a home. But as a trader, it seems hard to earn some money on the cheese trades, markets are flat, and transparent and give no incentive to buy or sell forward. We think volatility might only be back after the EU milk peak at the end of June. But we will keep informing you. We have sellers for

• 4 loads of Emmental for grating at €4500
• 4 loads of Mozzarella for May at €3525
• 6 loads of Gouda for May/June at €3825
• 6–9 loads of Gouda for Q3 at €3900
• 6 loads of Mozzarella for Q3 at €3750
• 6–9 loads of Cheddar curd for May/June at €4025

Powders: Closer to the bottom, and far from the top

Ok, not a very bald thing to say, but looking at the powder market we all know we are closer to the bottom of the market than we are to the top. And in all honesty, we cant really say that for butter and cheese. Both commodities have a rough potential € 1000,- down and € 1000,- up. But for SMP we can see prices drop back another € 300,- to € 400,- (although unlikely) but if demand really kicks in, prices of € 1500- € 2000 higher arent that crazy looking back at the previous years.

We see that for those who can scrape the cheap loads off the market, there is little risk in putting them in storage. In addition the storing costs of around € 2150-2200 aren't that high, compared to storing butter for example. Those who normally speculate see little earning in selling short at these levels so for every sale at lower prices, we hear a purchase at even lower levels is done. It feels that as long as we keep trading closer to the bottom, these are the trades we will be seeing.

We see sellers for:

• 100mt of Polish SMP FCA PL € 2250
• 200mt of NI-non standerdized with 36% protein at € 2225 DAP NL
• 200mt of Baltics non standardized with 36% protein at € 2250 DAP NL
• 200mt of SMP Codex EU15 fca NL € 2185 for May