Fats Falling Faster

Today, just a brief update from our side. Not a whole lot has changed since yesterday’s broader market summary—but given the rapid developments on the fat side, we felt a short note was warranted. Tuesday’s GDT auction seems to have kicked off a bearish wave in the fat complex. Here’s what we’re seeing:

Liquids: Cream Pressure Mounts

Availability is on the rise. While SMC prices remain firm for now, cream prices have taken a sharp step down. After hovering between €8800 and €8900 in recent weeks—with some trades even above €9000—prices dropped abruptly yesterday. Eastern EU cream fell to €8400 FCA, and by the end of the day, Germany and the Benelux followed, trading around €8500. From what we’re hearing, there’s still cream available. That volume either trades lower in the coming days or gets carried into next week, adding to the pressure.

The cream price slide appears to be driven by two factors. First, demand for block butter is fading rapidly. Second, retail promotions have stopped—unsurprising given the high costs—and buyers are pushing back on price. Also, milk collections across several EU regions are surpassing expectations, adding to the available fat pool.

Butter: Producers Step In

The butter market followed suit with a clear step down. July offers continued to weaken, with Solarec pricing fresh production around €7150, and Northern Irish butter trading as low as €7000. Producers are now actively offering, with NL/DE/BE plants matching those levels at €7100 and Polish origin butter offers are available directly from producers at €7050. Only the Irish producers are still quoting above €7100—some even at €7200—but it’s doubtful those offers are converting to actual business.

What makes this downtrend different is the absence of opportunistic buying. Normally, falling spot prices would trigger buyer interest. This time, we’re seeing the opposite: end users are selling back to traders or deferring deliveries. Take-offs are disappointing, and holding stock at these levels is proving expensive across the board.

Q4 has sparked some buyers attention. Prices have dropped to €7150 for NL/DE/BE butter, and we’re hearing bids for Irish origin at €7050. End users are engaging cautiously, buoyed by the recent GDT decline and the broader downtrend. Bids are coming in around €7100 DAP customer, which leaves little to no margin for traders to run a profitable cash-and-carry.

We don’t expect Q4 values to rebound in the coming weeks. A further decline seems more likely, although a floor around €6800 should emerge. The key question: will producers absorb the financial pain of holding unsold stock, or will they accept lower bids? Someone has to carry the cost—end users are saying “not us,” but some traders might step in, but only if the math works.

We start with the following offer

• 3 loads of NL/DE/BE butter for July at € 7125
• 6 loads of NL/DE/BE butter for Q3 at € 7175
• 6 loads of NL/DE/BE butter for Q4 at € 7200
• 12 loads of NL/DE/BE butter for H1 at € 7000
• 4 loads of Irish lactic butter for July at € 7050
• 4 loads of Arla DK/SE butter for July at € 7120
• 4 loads of Solarec butter for July at € 7150
• 4 loads of NL/DE winter butter for july at € 7425

Cheese: Offers Increasing, Buyers Hesitant

On the cheese front, pressure continues. More offers are hitting the market, and prices are sliding. Producers are offering Gouda/Edam for September around €4200 DAP customer, and Mozzarella offers are coming in between €4100–€4150 for the same period. But just like in the butter market, buyers are holding back. Postponed collections and trimmed orders are becoming more common. Export activity has slowed as well, and we’re hearing that inventories are quietly building in the background.