Snoozing at Sial

Who doesn't remember being a teenager? Going to bed late, setting the alarm for school at 07:00, only to hit snooze 15 times and finally get out of bed at 08:20, leaving only 10 minutes to shower, dress, eat, and get on the bike to school—only to arrive 10 minutes late. Some of our readers might have to dig deep in their memories to recall their own experiences, but we guess they might have a teenager living in their house right now, showing the same snoozing strategy. With two small children, we don't have time to snooze; our alarms wake us well before we want to, giving us no chance to postpone the inevitable. How does this relate to dairy? We've been seeing our partners hit the snooze button for weeks now, postponing the unavoidable decisions to engage with the market. Even at SIAL, the snooze button has been hit several more times by most of our partners, creating low activity and a very thin market. But like every teenager, there comes that moment when they have to get out of bed, get showered, and dressed to face the day—or in this case, face the market and engage.

Apologies to those who have missed our updates this week. With two small children (one teething, one afraid of ghosts), our time has been consumed a bit more than usual. Since we did not attend SIAL, we missed opportunities to keep everyone posted about market developments. But after catching up with our partners yesterday, it seems we did not miss much. We expected the market to choose a direction, and we had our headlines ready. We were expecting to open with "SIAL Short Squeeze" or "Pressure in Paris." But the same dynamics from the last few weeks still apply, leaving the market open for either a bullish or bearish scenario.

For liquids, we still see:

• High cream prices around €10,000
• Spot milk prices around 60 cents
• SMC prices down around €2,200 - €2,250

Looking at the butter market, we still see a very tight spot market. Those looking for sweet cream paid prices well over €7,600, up to €7,700. We traded German frozen butter between €7,600 and €7,700, and fresh butter even as high as €7,800. We still believe stocks of NL/DE/BE butter are running extremely low, so those in need of specific origins will continue to face high prices, especially with cream prices steady around €10,000. Prices for next year seem undervalued as long as butter prices for nearby remain high. Q1 prices traded slightly higher again for physical at €6,900, and on futures the €7,000 level is getting close again. We would expect Q1 prices to increase further as long as Q4 prices don't drop. Only the price of Irish butter seems to be on the low side for November/December, at around €7,250 FCA Ireland. To summarize the butter market:

• Due to high cream prices, low butter production
• Short-covered end users still looking for nearby collections
• Low stocks of butter (especially for certain origins)

In general, we would be stable to slightly bullish on the butter market.

Looking at the cheese market, we see a slightly more bearish sentiment, although we are trying to figure out why. If anyone is hitting the snooze button hard, it seems to be the cheese buyers. Retail negotiations for November onwards are still ongoing, and we understand that retail is still waiting for lower offers. It seems their strategy is working, as prices are coming down. We wonder how fast prices can rebound if buyers collectively return to the market. Speaking to buyers who aim to buy cheap products for prompt delivery, they seem to be coming back empty-handed. Gouda and mozzarella for prompt collections are harder to find.

In our view, the snooze strategy for cheese buyers is really paying off, but you don't want to be in the last group that returns to the market to engage. Considering milk intake, stocks, and butter valorization, we do not see why cheese prices should drop as much as they have in the past weeks. For cheese, we still see:

• Strong demand for cheddar
• Lowest prices for mozzarella (around €4,200 - €4,250)
• A lot of postponing from buyers' side

As for the powder market... yeah, buyers have been snoozing for roughly 20 months now, postponing purchases to the last moment and finding sellers at prices close to €2,400-€2,450 for more than 1.5 years. It seems that winning strategy won't change just yet. The market in the US remains weak, and demand across all regions is stable at best. Even with low stocks and lower production, the market doesn't seem to gain any upward momentum. In all honesty, we would advise all buyers of powder to continue hitting that snooze button as many times as they can, as we can't find any good reason to assume any change in prices in the near term.

In conclusion, it seems that much of the dairy market is still in snooze mode, with buyers delaying decisions as long as possible. Whether it's butter, cheese, or powder, everyone appears to be waiting for the right moment to jump in. But just like waking up in the morning, the longer you snooze, the more you risk missing the bus. And as we all know, there's nothing quite like the panic of realizing you're late—except maybe the panic of realizing you missed the best market prices. So, let's hope the market wakes up soon, before we all end up riding our bikes in pajamas!