Dazed and Confused: A Day Seen as a Dairy Trader

Yesterday we didn't manage to broker any business. With plenty of movement on the market, we just could not follow the logic of the market quickly enough to get our partners to engage with each other. The buyers of yesterday became sellers overnight and turned into buyers by the end of the day again. It seems the dairy market is without a clear vision and both our bulls and bears on all categories we broker just don't seem to know what to do. Their confusion seems infectious as we also fail to put our finger on the right spot. So without telling you the same as yesterday, let us take to through a day of the dairy traders we work with, as we see it! 

Nestled amidst the verdant beauty of Europe's countryside, with rolling hills where cows roam and birds soar, stands an impressive office. This is the stronghold of on of Europes best dairy traders, Charly of Wolfstone, affectionately known as "the COW," As the day starts, the sun is casting a soft glow over his desk, Charly, a veteran dairy market trader, gears up for a day filled with the fluid and often unpredictable trends of dairy prices. But as experienced as he is, he should be ready for what is coming.

The Butter Market: Extremely Volatile and tricky!

Charly's day starts with a focus on the butter market. In the last few days, this sector has been as unpredictable as the weather, with prices oscillating between €5500 and €6100. His phone is a hotbed of activity, buzzing with calls from buyers and sellers trying to find their footing in this volatile landscape. With a steady voice and a mind as sharp as a tack, Charly navigates through these conversations, guiding his clients through the tumultuous market. Although Charly does find himself changing his story every hour. In the morning Charly was bullish on the market, as stocks were low, producers had little to offer and futures were trading high. But somehow his market view changed during the day, seeing a bit more sellers attacking the market a bit more aggressively. Charly decided to follow this trend and started telling his suppliers the prices were going down and he needed lower offers. At the same time, Charly tries to sell a bit of butter, but his buyers now receive multiple offers and they are seemingly stepping out. Charly now is more bearish than he was this morning, and he is trying to see where he can sell. He decides to go for a coffee to clear his mind. But while he is drinking his coffee, buyers are starting to call and he is close to selling some good volumes. Quickly he turns to his producers and tries to lock in some extra butter. But it seems Charly is too late, the offers are gone, the cream has traded up and future bids are back to higher levels. Charly is bullish again, he wants to buy and regrets not taking the opportunity he had. He decides to take his eye elsewhere.

Rising Liquid Market

Shifting his attention to liquid dairy products, Charly scrutinizes the latest figures. Here, the news is more consistent. Cream prices have risen, trading between €6600 and €6850, and SMC has seen a significant jump, with prices ranging from €1550 to €1750. These numbers bring a strategic gleam to Charly's eye, as he contemplates how best to take advantage of these upward trends for his clients' benefit.

It seems the rising prices for liquids while the EU market enters the milk flush are a bullish signal for the market. Even with a few big factories shut down in the next weeks, the additional milk finds an easy outlet. The missing capacity to separate milk and diverge into cream and SMC is creating a lack of availability for those commodities and therefore prices rise. Charly quickly goes to his weather app and sees the temperatures are on the rise and good weather is coming. It boosts its confidence that demand will grow over the next weeks, while supply will show some changes. With the cows going out, back on their grass-fed diet, the protein levels in the milk are expected to rise, but the fat levels will see a significant drop. Charly becomes more bullish and decides to go back to the butter market to buy some additional loads. He now feels more comfortable with his position and decides to leave the liquid market for what it is and turn to the cheese market.

The Stagnant Cheese Market:

Contrastingly, the cheese market presents a different story. Charly reviews the current state, noting the lacklustre movement. Gouda bids are stuck below €3800, and Edam shows similar stagnation. His supplies keep repeating the same quotations above € 3800 so there is little margin to be made trading Gouda and Edam. Meanwhile, Cheddar prices hover well over € 4000,- but buyers don't seem eager to lock in more volumes if prices start with a four.  And mozzarella offers are set between €3550 and €3600, with only a few bids reaching €3500. The static movement in the cheese market can't seem to get Charly engaged, he decides to not take any risks and keeps his position as it is. In this cheese market, Charly can't add any value.

Powder Market Dynamics:

As the afternoon progresses, Charly contemplates the powder market. SMP sellers are ambitiously high, while buyers maintain a cautious stance, biding their time. This part of the market is like a strategic game requiring patience and insight, qualities that Charly possesses in abundance. He gazes out his window, the peaceful countryside serving as a backdrop to his thoughtful planning. On the powder market, Chalry is very indecisive. The higher SMC prices, and the higher trades on ONIL and GDT should give him confidence the market is going to trade higher. But he just can't see the SMP market trade up during the EU milk peak with little buyers and plenty of opportunities to produce. Once the cows go outside he expects that SMC prices might fall back quickly again, leading the market to cheap production and cheap stock building. He thinks about it long and hard, but Charly in the end decides that his competitors should take the lead on this. He already took some risks in trading the butter market.

The day concludes with Charly, the COW, standing by his window, the countryside bathed in the fading light of dusk. The serene landscape outside belies the day's intense market activities. For Charly, this encapsulates the essence of his profession – finding harmony and opportunity amidst the dairy market's ever-shifting dynamics. As he leaves his office, the setting sun casts long shadows over the fields, a reminder that tomorrow will bring fresh challenges and new opportunities in the intricate and dynamic world of dairy trading in the EU.