Only Up from here

Those who don’t want to read another report about a bullish market should stop reading, because more bullish news is pushing the prices in the dairy market up again this week. With butter prices trading higher, a firm GDT, liquids getting firmer and it seems prices can only trade up from here. Less milk, steady to firm supply and low stocks all point to the same direction, and more and more partners start to accept the reality. It feels 2021 all over again where a to optimistic forecast of milk production caught the market by surprise and set the market in a direction to all time highs.

Normally we would follow up with the other side of the argument, but frankly we can’t see the other side of the argument. The current market dynamics can’t change over night, and only an unforeseen event can change the current market direction in our opinion. But as we can’t foresee the unforseable, we would advise partners to trade with caution. Gettting caught short in this market could be expensive, and the risk of overselling from a producers perspective lies around the corner.

As we are traveling we need to keep our update short. But looking at the GDT result of yesterday we think it’s safe to say that even though the market felt bullish, the result overperformed expectations for most with an overal result of 3,3% up it was the best result so far since February this year. Butter prices rose 5.1% and AMF prices rose 3.5%, even though the futures forecasted a very negative result. Mozzarella prices shot up 9.8% and SMP lifted the price 3.5% while WMP went up 2.9%. Overal a very firm result.

The result proof to us the world wide demand for fat is robust and with low stocks and lower production in the first 5 months of the year, a real deficit is forming for fats. Cheese prices seem to follow in the tracks of Butter and AMF and even the powder side of the market is getting pulled up by the bullish sentiment. With volumes on GDT declining over the next monst we expect the next GDT to remain bullish and we expect prices to increase further.

 Commodities in short:

Butter prices rose today and got traded at € 6600,- for June and offers for Q3 now above € 6700,-. Cream prices keep pushing higher and we hear wide ranges of € 7500 up to € 7700. It is hard to get firm offers, but we would expect the following:

• 6750 for Q3 NL/DE/BE
• 6500 for Polish in June
• 1 truck Polish sweet cream for this week €6350 fca Germany

Cheese is also seeing higher trades. We hear Gouda prices for May/June well Obote € 3900 and Q3 bids are around € 4050 without any offers that can match these prices. We see all offers going up and expect to have offers in the morning:

• 9 trucks of Mozzarella for Q3 at € 4000
• 6 trucks of Gouda for Q3 at € 4200

Powders are all trending higher although the demand still can be found on extremely low levels, or for far out. Offers are to be found for generic brands for close by at prices around € 2400. We expect to start the day with:

• Ukrainian SMP DAP NL at € 2375 for June (125mt)
• Solarec SMP June/July at € 2550
• EU15 SMP FCA NL June at € 2400 (200-300mt)