Back from the Break

Over the last two weeks, we have been travelling and have not been able to broker too many deals and share as many insights with our partners as we usually do. But now we are back from our two-week break, and ready to inform, advise and connect again with our partners! In our update "In balance for the break" that we shared two weeks ago, we already predicted two relatively slow weeks with more sideways action for cheese and SMP, and some sideways to slowly upward movement on butter. It seems we were right. We connected with some of our trusted partners last Friday and this is what we can tell you we learned. 

The market for liquids is drying up a bit with the good weather. We hear prices for raw milk are going up toward 38-40ct in the Benelux and spot milk quantities are dropping. Italy seems to be looking for more milk and that is pulling the German prices up. And with less raw milk there also seems to be less SMC and cream. SMC prices are trending up fast with prices reported at € 1600 although at the end of the week prices of € 1800,- seemed to be most representative. Cream prices are trading up as well with the lowest prices around € 6800 and some even claiming prices well above € 7000,-

Butter: Looking for sellers

The cream price and the butter price have been well connected in the last months, and with cream prices trading up roughly € 600,- the butter price increase of roughly € 150,- still feels modest. The price isn't rising as fast as we understand buyers are holding off, still hoping for lower prices. But it seems purchase decisions are being postponed, but not cancelled. Once the buyers start to accept the higher prices we think the butte prices should show a similar move as the cream price did. Our H2 expectation of butter pieces well over € 7000,- becomes more funded as we see butter stocks are low, butter production remains behind on last year and consumption worldwide of fats seems steady.

We see prices in the US reaching new highs and the GDT result of last week also continues to show strong international demand. We do recognize the strong pushback from the industry that these high prices aren't workable. But as we have seen two years ago, even at prices well above € 7000,- the industry kept functioning. The price corrected as the high butter prices inspired more production, not because it moved consumption down. But with low protein prices and relatively steady cheese demand, we think the market won't drop as fast this time as we saw last time.

We expect to start the week with the following:

• a bid for 6 trucks NL/DE/BE fresh/frozen for Q3 at € 6100
• a bid for 6 trucks NL/DE/BE fresh/frozen for June at € 5950
• a bid for 12 trucks of Polish fresh sweet cream for H2 at € 6100
• a bid for 6 trucks Irish lactic for Q3 at € 6000 fca Ireland

We do expect to have sellers for

• 1 truck of German 10kg blocks for May at € 6050
• 2 trucks of NL/DE/BE winterbutter for June at € 620
• 6 trucks of NL/DE/BE fresh/frozen for Q3 at € 6400

Cheese: Still Sideways

Speaking to a few partners last week about cheese, it seems time has stopped. It seems the market is still very steady, although most do confirm relatively steady sales as well. The expected ageing of the delivered cheese seems manageable. We would not be able to give any new insights as most of the feedback we got was... nothing has changed.

Foodservice is pulling a bit on the mozzarella market, although we haven't seen prices shoot up either. The bearish prices of about € 3400 are gone but nobody seems ready to pay € 3700 as some producers expect (or claim to pay). On the Gouda side of the market, it feels demand is still there slightly below € 3800 and offers a bit above. For Q3 people are willing to pay a bit more but sellers are hard to find.

We expect to have the following market

• a buyer for Gouda for Q3 for 9 trucks at € 3800
• a buyer for 9 trucks of Mozzarella for Q3 at € 3500 (german)
• a buyer for 12 trucks of cheddar curd for H2 at € 3950 DAP NL

Powders: When UP?

Finally, we have to look at the powder market. For us a market that remains hard to read. Fundamentally from a production side we would be very bullish. Production over all the major production areas is down, stocks are down so the market only needs a bit of buying impulse to jump up. The only thing missing.... is that demand impulse.

The last GDT SMP result was again flat v.s. the previous event, making the market relatively stable for already 2 months, but WMP prices are seeing a steady increase. Prices in the US on CME have also moved back in in the previous two weeks but are still flat v.s. 2-3 months ago and we see a similar picture for the EU on the EEX. Premiums for further out are quite high and the think the market is paying relatively high prices for further out. It seems everyone wants to hedge itself against a quick market rally as we no little partners who really expect a further price drop. The biggest fear our partners (mainly traders) have is that the current low volatility in the market will remain and the low prices are here to stay for a long time.

We expect our markets to open as follows:

• a buyer for 450mt of Solarec SMP for Q4 at € 2525
• a buyer for 450mt of BC spec Bigbags for Q3 at € 2375 DAP NL/BE
• a buyer for 400mt of Non standardized SMP EU-15 DAP NL at € 2250

We would have a seller for

• 100mt of Polish Non Standerdized SMP for prompt at € 2400 FCA PL