Micro Volatility, or Macro Stability

Yesterday, the market kicked off with more energy compared to a typical Monday! Buyers and sellers were busy in the cheese and powder market, and prices were slowly heading down. There is some positive news here, as we see more buyers at the lower levels for cheese and SMP, hinting at possible new support levels soon. Good news for the market! The butter market is a bit of a different story, though. Buyers are aiming lower than last week, and last week's prices already took a dip.

Now, let's talk about the buzz in most conversations – uncertainty. Checking out the milk collections, France took a tiny step back in intake, while Germany's milk intake is a tiny bit higher than last year's. However, when speaking with producers, they're not as optimistic about the milk forecast as some traders and end users are. Maybe they're just being cautious, but it's good to take their perspective into account.

The big question mark hanging over everyone is how much more of the rollercoaster of prices we've seen in the last two years we are going to see in the next months. With crazy ups and downs, it's tough for most position managers to stick to their game plan. But here's a tip: don't hit the panic button too soon. Averaging out prices over four weeks shows that, despite daily ups and downs, things aren't as wild as they seem. For example, the average butter price was €5500 in December, €5400 in January, €5700 in February, and now it's back at €5600. Gouda prices and SMP prices have their own stories too. Gouda prices showed a similar pattern, averaging €4100 in December, €3950 in January, €3900 in February, with current trades ranging from €3850 to €3900. SMP prices followed a very gradient decline, trading at an average of €2450 in December, €2425 in January, €2400 in February, and now experiencing a slight dip towards €2350.

Yes, when you zoom in on the market daily like we do, it can be a bit dizzying. Butter prices swinging by €400 per week and cheese making its own moves. But if you take a step back, you'll notice a smoother trend. So, instead of getting caught up in every daily price change, think of the spot market as a chance in your everyday trading fun, while your eyes stay on the long-term game plan. Cheers to a steady ride!