Hiding Buyers and Searching Sellers

In a market that is hardly moving and not showing much activity, it is hard to write something new. So today's update will be short and simple. The standoff between buyers and sellers is intensifying, and we would not want to put any money on which side of the market will win the standoff. We hardly see any sales pressure, but buyers are postponing decisions much longer than we would have anticipated, bringing up the question: how long can they wait?

Looking at the market for liquids, we see a tight market with fewer buyers. That keeps the market roughly in balance, although differences between reported prices are starting to grow. This is typical for a thin market that has few buyers and sellers actively engaged. We hear cream prices between €9,700 and €10,200, SMC prices are reported just under or just below €2,500, and raw milk prices remain steady between 60 and 62 cents.

The high prices for cream are still valorizing well over butter prices, even though quotations jumped up. The Dutch quotation remained steady for butter at €8,100, but the French jumped up to €8,180, and the Germans to €8,500. Although some debate the German quotation, we did not find any cheap offers from German producers in the last week. And with retail prices up to €8,500/€8,600, we doubt we will see this quotation go down. We did find some lower butter trades on Irish butter at €7,800-€7,850, although offers at these prices have dried up. Offers for NL/DE/BE are back up over €8,000, and Polish butter offers are close to the German quotation price.

We did see EEX futures for Q1 slide down a bit again to our surprise. We still believe buyers for January will not find quotes for butter well below €8,000 as long as the market remains as tight as it is today. But futures traded down from €7,550 to €7,475. We expect to start the day with the following market:

NL/DE/BE

Period	Bid	Size	Offer	Size
October	€7,900.00	88	€8,050.00	88
Q4	€7,850.00	132	€8,050.00	132
Q1	€7,400.00	132	€7,550.00	66
Q2	€6,900.00	132	€7,100.00	66

Irish Butter

Period	Bid	Size	Offer	Size
October	€7,800.00	44	€7,950.00	88
Q1	€7,250.00	132	€7,700.00	Indicative

For October, we would also have 2 trucks of Portuguese sweet cream offered at €7,975 FCA NL.

The cheese market did not show us any signals of movement. Apart from more selling interest at even higher levels, we did not get any bids close to the offered prices. One of our partners asked us if the lack of activity made us more bearish in our outlook, but the opposite is true. The longer buyers wait, the more intense we think the short squeeze can get. We expect to open the day with the following market:

Gouda

Period	Bid	Size	Offer	Size
October	€4,700.00	44	€4,950.00	44
Q4	€4,750.00	132	€5,000.00	132

Mozzarella

Period	Bid	Size	Offer	Size
October	€4,600.00	44	€5,000.00	44
Q4	€4,650.00	132	€4,875.00	Indicative

In addition, we have a bit of demand for Irish White Mild for October, 44/66 mt at €5,100 FCA NL.

The SMP market continues to show more weakness, with offers dropping bit by bit, although bids are dropping a bit faster. And where we warned sellers in the last run-up that pushing up prices can be dangerous, the same can be said now to buyers. Pushing down the market too much might leave you empty-handed. Buyers are strengthened in their bearish outlook by the correction on GDT Pulse, although it feels we have seen only a very minor correction today. WMP prices on the GDT Pulse did increase.

We expect to have offers for powders as follows:

Product	Origin	Volume	Period	Price	Incoterm
FCMP	IRL/BE	132	Oct	4380	FCA NL
SWP	Spanish	150	Q4	975	FCA SP
D40	Spanish	200	December-March	1150	FCA SP
SMP Nonstand	French	44	Oct	2575	DAP NL
SMP Codex	Belgium	100	Oct	2465	FCA NL
SMP Codex BB	French	100	Oct	2564	FCA NL

We expect to have bids for:

Product	Origin	Volume	Period	Price	Incoterm
FCMP	IRL/BE	132	Oct	4250	FCA NL
SMP Nonstand	French	44	Oct	2500	DAP NL
SMP Codex	Belgium	100	Oct	2400	FCA NL
SMP Codex BB	French	100	Oct	2400	FCA NL

Overall, our market outlook remains bullish on butter and cheese and range-bound on powders. The inactivity now should only boost the move that is about to come. Those who argue the market is more bearish than bullish have a valid point when they say that if we would see a bearish correction, we also expect that to be a big move on both butter and cheese.