Securing Pre Summer Deals

Last week was exceptionally active, with over 1800 metric tons of butter trades crossing our books. Many partners were keen to secure pre-summer sales and purchases. Concurrently, the powder market lost upward momentum and corrected sharply downwards, while the cheese market showed renewed activity. As we prepare for our annual leave, we are also focused on securing pre-summer deals. If you are in the same boat, ready for a well-deserved summer break, let us know how we can assist you.

The rise in temperatures across Europe last week directly impacted demand for fresh products and reduced milk collection. This led to higher prices for SMC, cream, and raw milk. Raw milk prices surged above 50 cents, SMC prices ranged from €2100 to €2250, and cream prices exceeded €8000, with some reports of sales up to €8400. Although temperatures are expected to cool down slightly this week, the market for liquid dairy products is expected to remain tight.

Anticipation for the Upcoming GDT Auction

The upcoming Global Dairy Trade (GDT) auction is expected to be bearish, following a 0.5% decrease last week. We anticipate a downward correction in Q4 prices for SMP and expect butter prices to decrease from their previous high. While high butter prices are still anticipated, they are likely to be more stable over a broader period. We do not expect the high $8800 price from the last GDT auction to be repeated. Overall, we foresee downward trends for powders and a correction in fats.

Cream and Butter Prices on the Rise

In the EU, butter prices are expected to remain firm due to high cream prices, which are trading well above €8000. The German retail price for July closed around €6800, indicating stable or rising block butter prices in Germany. Polish butter prices, typically linked to cream prices, are unlikely to be available below €6750.

Last week saw increased buyer interest for Q4, although EEX futures still appear to be in backwardation, pushing buyers' price expectations lower. As Q3 begins, we expect this backwardation to shift towards Q1, with Q4 prices moving into contango soon. Without higher price incentives for Q4, cash and carry trades are unlikely. With spot prices expected to remain steady, Q4 prices could rise rapidly in the coming weeks, potentially trading well over €7000 considering storage, freezing, and financing costs.

We start the day with the following offers

• 6 trucks for Q3 NL/DE/BE at €6675
• 6 trucks for Q4 NL/DE/BE at €6750
• 2 trucks of Polish Sweet Cream butter for July at €6650
• 4 loads of Irish Lactic butter FCA Ireland for July at €6675

Active Spot Market for Cheese

Last week, conversations with cheese partners revealed a postponement in decision-making by both sellers and buyers. However, there is an expectation to secure volumes in the next 1-2 weeks, particularly for Mozzarella and Gouda, with prices around €4000. The balance between buyer and seller groups will determine slight price fluctuations.

We start the day with the following offers

• 2 loads of Emmental, NL Origin at €4675 for July
• 2 loads of Gouda, NL/DE Origin at €4040 for July
• 2 loads of Edam 30% NL origin at €3950

Depressed Powder Market

The powder market appears to be preparing for a summer break. Many partners had anticipated a price increase following the last GDT and ONIL rumors. However, the prices and volumes secured by ONIL have led to a bearish outlook. Despite several bullish signals, the predominant lack of demand is causing prices to decline. Most partners are waiting for the GDT results, and if they align with our expectations (down), we anticipate lower offers in the market. We already hear French producers are selling SMP below €2300, and some German factories are indicating lower offers as well.