Bearish GDT Breaks Bullish Bounce

The first two trading days of the week were again highly active, with butter dominating volume. What looked like a bullish bounce quickly fizzled out. Next-year prices for NL/DE/BE butter moved from last week’s lows of €6,100 up to €6,300, while Q4 recovered modestly from €6,300 to €6,400 for NL/DE/BE origins. Notably, Irish, Danish, and Swedish butter showed little reaction. Other commodities remained calm — cheese continued to show only sellers, while powder traders stayed on the sidelines awaiting GDT results.

The question is whether this bounce on butter was the start of a bullish reversal or simply a healthy correction after last week’s €500 drop. We lean toward the latter. Buyers stepped in to lock margin, even if that meant paying €100 above the bottom, but the bounce was short-lived. As soon as prices firmed above €6,400 for Q4 and €6,300 for Q1, more sellers joined the offer side.

Liquids: Early Weakness

The first signs of weakness did not come from GDT but from the liquids market. Cream prices turned heavy, with offers starting at €7,800 FCA before sliding. Deals were reported as low as €7,450 FCA for nearby loadings and between € 7,600 and € 7,750 DAP end users for next week. Buyers who buy regular sizable volumes week by week tell us they have already covered the majority of their needs, while major producers still need to sell. A September drop in cream prices is unusual and should serve as a clear warning signal: sellers cannot afford to wait for demand to magically return.

GDT: Breaking the Bounce

The GDT confirmed bearish momentum. Butter prices fell 2.5%, with EU Solarec values down 6% to €6,420–6,450. AMF lost 2.6%. Cheddar surprised with a 3.6% gain, but mozzarella plunged another 4.6% to just above €3,600, its lowest since May 2024. SMP was the weakest link, down 5.8%, with EU trades at €2,260–2,300 and NZ product now at a discount, further challenging EU export competitiveness. WMP dropped 5.3%, pushing EU product below €4,000 — another blow to the fat market.

The outcome underscores a global shift. EU demand is softening, supply is expanding, and similar dynamics are visible in the US and NZ. CME prices for butter, NFDM, and cheese all turned lower. NZ butter trades just under €6,000 — the key question now is whether that holds as support, or whether the EU will need to break below it to attract business.

Butter: Quotation Frustration

Roughly 900 mt of butter changed hands in the first two days, but by day’s end Q4 appetite had dried up as sellers flooded the market. Quotations remain a sore point and we expect the market to be on standby to see how the countries will quote. We expect to see the following:

• French: Physical sales reported at €6,200–6,300 FCA from both traders and industrial buyers, but we doubt the official quote will reflect that. Anything above €6,500 will spark frustration.

• Dutch: Traders cleared good volumes last week between € 6,300 and €6,400, while producers aimed €100 higher. We expect the quote at €6,500–6,600.

• German: Physical sales widely reported at €6,300–6,600. A quote above €6,600 would be a surprise. We expect an EEX average €6,550–6,600, which would help add futures liquidity.

In cream, the market is at risk of slipping below €7,600. If so, butter churns will likely activate, with offers around €6,250–6,300 for NL/DE/BE. If Irish sellers want to move stocks, they will need to offer below € 6150 to do so. But the Irish have resisted selling lower for a long time, so they might hold of another few weeks.

Cheese: Buyers Missing

The cheese market is even more concerning. Sellers are easy to find, but bids are absent. End users remain on a month-to-month strategy, unwilling to step into forward contracts. One customer summarized it bluntly:

“If producers who haven’t sold forward in two years suddenly ask us to commit six months out, below the current spot price — that tells me everything I need to know.”

With mozzarella under pressure after the weak GDT, we expect cheese to continue searching for support. That support likely comes in around €3,500 for Gouda, Mozzarella, and Edam.

Powders: Weak, Weak, Weak

Powders remain the weakest segment. Liquidity is absent, sellers dominate, and demand is nowhere to be found. Most expect prices will need to break below €2,200 to trigger fresh buying interest. The NZ forward curve is flat and bearish, CME mirrors the tone, and EU has little room other than sideways or down.

We did see one deal — 100 mt of UK high-protein SMP at €2,360 — but this feels like an isolated case, not a repeatable market level. EU production remains strong, while demand is weak. With similar conditions in NZ and the US, the recipe points clearly toward sub-€2,200 powder prices.

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Final Summary

The dairy market started the week with a brief butter bounce, but GDT quickly broke the momentum, pulling values back down across commodities. Liquids showed early weakness, quotations remain disconnected from physical reality, and buyers are absent in cheese. Powders are the weakest link, with global oversupply and shrinking demand pointing toward further declines.

👉 Conclusion: The bounce might already be over. The bear market continues to build momentum although we have to admit, forecasting to what lows we can drop... everything within a 5% and 25% drop seems fair.