Bears on the Butter Break, Bulls Press the Powder Pedal

Yesterday was an entertaining day — on multiple fronts. Our oldest son turned seven and has officially declared himself a man. We're not going to argue with that. Meanwhile, the market had its own ideas: over 1,000 MT of butter changed hands, we brokered 200 MT in powders, and prices moved hard in both directions. Butter came down sharply, powders showed clear strength, and cheese quietly continued its weekly grind higher. The GDT result landed largely where we expected — with one notable exception.

GDT: Misleading Headline 

The headline change was +0.1%. Boring. Look past it. SMP rose more than 5%, with EU product trading between €2,750 and €2,800. Six weeks ago, anyone quoting those levels would have been laughed out of the room. Butter underperformed, finishing down 0.9%. The biggest disappointment was Solarec. We had pencilled in €4,700–€4,800, but with EU butter already sinking hard in morning trade, Solarec settled around €4,600 for April/May — nearly €400 below the result two weeks earlier.

Mozzarella behaved as expected, posting a small increase. It now trades around €3,650.

Our read: GDT prices still look relatively overvalued compared to what EU market fundamentals suggest. With the northern flush arriving, we believe this may be the seasonal top for overall GDT levels. There is little room to run from here.

Butter: Taking a Punch

In the Netherlands, we say the market took off a jacket. Yesterday, it took off two. Q2 dropped towards €4,450 — no buyers in sight. Q3 fell to €4,600, with buyers already pushing for lower. Q4 traded between €4,750 and €4,800 by the close.

Two weeks ago, post-bullish GDT, Q2 was touching €4,900–€5,000 and H2 was trading up to €5,175/MT. That's a €400–€500 swing — not unusual for butter. What is unusual is how many times this market has swung that hard in just eleven weeks.

Cream is where it gets interesting. The lowest print we heard yesterday was €4,750 — and falling. With block butter demand dropping quickly, the question is whether butter producers will keep churning or start selling cream instead. At current values, cream is the better margin call. If cream keeps sliding this early in the season, before Easter, we don't think the bottom is in yet.

SMP: Testing New Highs

Six weeks ago, anyone forecasting SMP closer to €3,000 than to €2,000 would have been called delusional. We're almost there.

We traded powders yesterday at €2,710 for April delivery, and we're hearing specific grades going higher. If GDT is a reliable leading indicator — and it has been — the upside in EU SMP remains strong. A correction will come; nothing trades up in a straight line. CME traders apparently haven't received that memo. NFDM is posting new highs almost daily.

Here's the number to watch: CME spot NFDM hit $1.80/lb, with butter at $1.85. The spread is nearly gone. The question is no longer theoretical — it's becoming a matter of when, not if, NFDM crosses above butter on the CME.

And the bigger question for the EU: could SMP trade close to butter prices before the year is out?

Final Note

Markets this year have been multiple lessons in humility. Buyers told sellers beginning of this year they should have sold earlier, those same sellers told buyers 5 weeks later they waited too long. Two week later the market turned bearish on the sellers again, only to show some bullstrength when the Iran war broke out. Now the buyers (on butter) are back in the driving seat. For how long? At least until the end of this week we think. After that? Let's all be humble.