Weekly Update: Asking for Directions

After a period of volatility in the initial weeks of the year, the market displayed a sense of calm last week. Although there were marginal reductions in SMP and butter prices, cheese prices remained steady. Despite the appearance of stability in prices, we believe this may not accurately reflect a stable market. The postponed activities seem poised to re-enter the market, potentially bringing back volatility.

Traditionally, the end of the month tends to be a quieter period based on historical data, while the first week of a new month often introduces more dynamic market behaviour. But before the market can regain activity, it requires fresh inputs. The Tuesday GDT may influence the bearish powder market, although significant upward or downward movements are not anticipated. The liquid markets are expected to provide more momentum. With cream and smc prices facing pressure, commodities like SMP and butter may see lower trade values. An increase in liquid prices could inject new energy, whereas a further decline might exacerbate the downward trend in both commodities. Recent trades indicate a certain heaviness in the market.

The upcoming Easter season is anticipated to exert significant influence over the next three weeks. Typically, Easter demand elevates the market for cream, and butter experiences increased demand. While there's no compelling reason to expect this year to deviate significantly from past patterns, the early arrival of Easter and seasonal delays in countries like Ireland could introduce additional demand pressure in both west and east EU regions. Given the existing low stocks for butter and cheese, these commodities might experience heightened demand if retailers' forecasts are surpassed.

All factors considered, the week ahead may remain relatively subdued if the GDT outcomes align with expectations, and if the liquids market avoids extreme fluctuations.