What Happens After Easter

The Easter Weekend always is presented by the market participants as a pivoting point in the dairy market. The weekend does come at a point in which the dairy market usually crosses two important changes. The cows go outside and the milkflush starts, while at the same time, the sun shows itself a bit more and demand for fresh products increases. Historically the increased demand has a bigger impact than the increased supply, but not every year is the same. So will we see a resurrection of the dairy market prices in April? Or does the market crumble under the pressure of the milk flush?

Looking at the trendlines of last week we would expect to see a bit of everything as the market seems to be short on fats, but it is swimming in proteins. The market for liquids shows a similar picture. Skimmed Milk and Skimmed Milk Concentrate are trending lower and whey concentrate prices are struggling as well. Raw milk is trending sideways although it feels the market has a harder time finding an outlet for all the volumes. But the cream price seems to be holding up very well, with cream prices reported at the end of the week between € 6700 and € 6800.

Bullish Butter Sentiment

The butter market had a pre easter rally, trading the futures well over € 6000 and physical prices traded as high as € 5975 for Q3. At the end of the week, it was impossible to find sellers, while buyers were plenty around. We saw futures leading the way up with prices being hit as high as € 6150 for Q3. The relatively strong offtakes for cream, the low availability at producers and the short coverage of end users seem to add up to the bullish result. And while the milk intake is growing, the offtake for products containing fat remains strong as well.

We expect the demand for cream to increase as soon as good weather arrives. In the west and east EU, the weather forecast improving fast, and we might see the ice cream makers back on the market soon again. It might take a bit longer than normal after easter, as easter this year fell early. In comprising to next year, we will see easter 3 weeks later.

We didn't have any offers left last week, so we start with the following bids only:

• 6 trucks NL/DE/BE fresh/frozen for Q3 at € 5975
• 12 trucks of NL/DE/BE fresh of Q4 at € 6000
• 4 loads of NL/DE/BE fresh for April at € 5700
• 6 loads of Irish fresh/frozen for June at € 5700 FCA NL

Sideways or Slightly Bearish

Last week we did see some more activity on the cheese market. Prices do still trade sideways, but we did detect a slight bearish trend. We are not convinced the trend will pull the market down a lot, but it seems the weaker protein market does pull the market a bit down. The logic remains the same as in the previous week, that a higher valorisation of cheese and whey v.s. butter and SMP should lead to higher cheese production. In addition, the added volumes from the Aware plant in Ireland should start to have an impact on stocks.

So far the price for Q3 seemed impacted most with offers coming down from € 4000 to € 3880. For Q2 it's mainly the bids that started to come down. We see buying interest for April for Gouda at € 3750, this is down from € 3800 earlier in the week. But as we did see in the previous months, bids and offers on both sides of the cheese market are low in volume. Where butter prices seem to be an indication of higher prices for cheese, the lower protein prices seem a concern for lower prices. We are very unsure about the market direction for cheese, but flat seems to be the safest bet. As said, we expect to start the week with bids for:

• 4 trucks of Gouda 48% slicing for April at € 3750
• 6 trucks of Gouda 48% slicing for Q3 at € 3750
• 1 truck of Mozzarella for the second part of April at € 3400

Did ONIL save the powder market?

After trending lower for a few weeks in a row, the powder market found some strength again during the ONIL tender. Prices in the EU "bounced" up again roughly € 200,- (depending on how low you saw the market) and we see some partners speaking about a revival of the protein market. We are not so bullish.

Although the ONIL tender ended up on a higher price level than we anticipated it still feels like the market is far from recovery. Looking for close by we expect the market to experience more pressure on the SMC side and with that the production of cheaper SMP. Speaking to one partner who is separating the cream from the milk, we understand that due to the higher prices paid for cream (and cream prices are trending up), it is easier and still profitable to sell SMC at prices between € 1200 and € 1400.  More profitable than selling raw milk at 37-38ct on the spot market. If we continue to see prices during the next couple of months between € 1200 and € 1400 we expect that a lot of partners we work with to be able to sell SMP prices with a profit below or just above € 2000,-.

The market for protein needs help from the export markets And although ONIL did signal that there is some demand, we also noticed that the tender was done for June until September shipment. The question is how long ONIL can stay away from the market before coming back for more. We would expect them to be back once prices are becoming attractive for the period September - December.

We expect to have sellers for

• 200mt of NL SMP codex at € 2250
• 300mt of Irish SMP codex at € 2300
• 200mt of German SMP codex at € 2275
• 200mt of French SMP codex at € 2800

In general, we expect the market to trade in the same trend as we did in the last weeks, although the trendline up for butter might get a bit steeper up, and the trendline down for smp might get a bit sharper as well. This is because we think a lot of buyers for butter held of purchases until after Easter, but most will have to engage in the next weeks. The opposite we expect for the powder market. We have seen most of the buyers active, but almost none of the sellers. We might see a lot of sellers for SMP in the next week, pushing prices quickly down as we expect that little partners want to stock up more products during the peak.