Waiting For A Spark

Last week, the market showed a bit of resilience across the board. While powders saw only modest gains, the market does feel lighter and better supported at the lower price range. Cheese prices crept up, though we need to shift our gaze (again) to butter for any real bullish signs. But here’s the most asked question: will the trend hold and for how long?

Reflecting on last week, we kept getting asked, “What’s driving this bullish rally?” But maybe the real question is, what fueled the bearish slump? October had all commodities easing up a bit, riding on the hope that increased milk production would loosen up tight stockpiles. Milk intake reports from France and Germany seemed promising, pushing sellers to step on the gas and buyers to slam the brakes.

Fast forward a bit, and the milk supply party appears to be winding down. France’s surplus over 2023 is slipping away, Germany’s numbers are down over 2% compared to last year, and the Netherlands is clocking its weakest year in five with no signs of improvement. Even Poland, our would-be “milk promised land,” is looking shaky. So now, we’ve got sellers reaching for the brakes and buyers inching back toward the gas pedal.

And there’s more. EU exports are finally picking up some steam. We brokered quite a few export deals for butter and are seeing increased powder demand from the Middle East. Put together weaker milk intake with a touch of export demand, and voilà—a recipe for a mildly bullish market.

GDT: Steady on the Upswing

Though recent GDT events have been predictably unpredictable, we’re taking a guess anyway: we expect this week’s GDT to show strength again. More anecdotal demand, a slightly firmer Europe, and upbeat futures lead us to believe prices are heading up. We’re particularly optimistic on powders but wouldn’t be shocked if butter and AMF also see a small lift. If we would have to make a prediction, we would expect a 1-3% increase across all products with SMP taking the shine.

Butter: Low on Stock

Butter prices surged again last week, with Q1 trades above €7,300 for NL/DE/BE, while November and December climbed past the low €7,000s, settling comfortably over €7,500. With stocks running low, we expect more upward movement. There’s plenty of November and December demand, but both producers and traders seem short on stock. If demand is as strong as it appears, we could be nearing the bottom of the stockpile, potentially leading to significant price variations depending on origin and freshness. In addition it seems the German retail price is once again set at € 8550, suggesting cream demand will remain strong throughout the next 3-4 weeks.

Looking toward 2025, things seem more bullish. Sellers are scarce, and buyers are coming back, likely reconsidering their decision to hold off on purchases a few weeks back. We expect January and February prices to climb above December’s, with no good reason for December prices to ease up. Our view? Expect January and February to comfortably trade over €7,500.

We’re set to kick off with the following markets…

NL/DE/BE

Period	Bid	Size	Offer	Size
Nov-Dec	€7450	44	€7700	88
November	€7500	88	€7750	132
Q1	€7250	132	€7450	66
Q2	€6900	132	€7100	66

Irish Butter

Period	Bid	Size	Offer	Size
November	€7400	44	€7700	88
December	€7400	44	€7650	88
Q1	€7100	132	€7350	132

Polish Butter

Period	Bid	Size	Offer	Size
Nov-Dec	€7850	44	€8250	88
Q1	€7000	132	€7400	132

Cheese: Offers Up, Buyers Hold Off

In the cheese market, sellers are clearly taking cues from butter’s performance. Producers have quickly raised their offers, but they’re looking over their shoulders, waiting to see if buyers are following. Unlike their butter counterparts, Gouda, Mozzarella, and Cheddar buyers seem a bit more relaxed, in no rush for November stock. But with butter and SMP prices ticking up, it’s only logical to expect cheese to follow suit… eventually.

Maybe this week’s GDT will shed some light on international demand, as the market itself has been tight-lipped. Asking cheese producers, they seem fairly confident that recent trading prices from the past 2-3 weeks are unlikely to hold in the coming weeks. So, we’re kicking off with the following cheese market...

We also hear German retail prices are set, and at relatively low levels compared to the starting levels the market started of mid-September when the request for quotations opened. For those who are looking for reasons to be bullish, the retails won't have to go up much with their prices, reducing the risk of demand destruction once again. We start the week with the following markets.

Gouda

Period	Bid	Size	Offer	Size
Nov-Dec	€4300	44	€4600	44
Q1	€4200	132	€4500	132
Q2	€4100	132	€4500	132

Mozzarella

Period	Bid	Size	Offer	Size
November	€4150	44	€4350	44
Nov-Dec	€4150	44	€4300	88
Q1	€4100	132	€4350	88

The powder market seems to be gaining a bit more traction—our partners are telling us they’re moving greater volumes to the Middle East and Southeast Asia. If these regions are indeed ramping up their buys, we should see it mirrored in this week’s GDT. The latest GDT Pulse has been holding steady, and futures look promising. Perhaps a bullish GDT will be the spark the EU powder market needs.

As for the SMC market, we’d be a bit more cautious. While all other liquids seem to be on an “up, up, and away” trend, SMC remains in a downward drift. Traders tell us it’s not a surplus of supply causing prices to hover around the €2,200 mark—it’s simply a lack of buyers.

We’re starting the week with sellers for...

Product	Origin	Volume	Period	Price	Incoterm
FCMP	IRL	88	Nov	4150	FCA NL
SWP	Spanish	150	Nov-Dec	900	FCA SP
D40	Spanish	200	Dec-March	975	FCA SP
Codex BigBags	French	100	November	2360	FCA FR
SMP Codex	Belgium	100	November	2450	FCA NL
FCMP Instant 2024 production	EU	100	November	4050	DAP NL

We would have the following bids

Product	Origin	Volume	Period	Price	Incoterm
FCMP BigBags	EU	44	Nov-Dec	4100	FCA NL
SMP Nonstand	EU15	100	Oct	2400	DAP PL
SMP BC Spec	EU	300	Q1	2525	FCA
SMP Codex for ONIL	Limelco	100	November	2430	FCA