Who Let the Bulls Out?

The week started of strong, and it's continuing to look strong as well. With increasing prices for liquids, we see the market is getting ready for higher prices. We did get a lot of calls/emails/WhatsApp messages asking what is driving our bullish view/ or this bullish momentum. Judging from these questions, it seems a lot of partners had been expecting an opposite move. The answer lies within the question it seems. With many partners convinced prices should drop, we now see many buyers returning at the same time to the market, trying to lock in whatever cheap offers they can still find. And a market with more buyers and fewer sellers almost never trades down.

More demand for raw milk is pushing the price well over 40ct and we even hear prices as high as 43ct delivered for the next weeks. SMC prices continue to hold well above € 1800 and for cream we hear prices moving up to € 7250 DAP Germany. We need to keep in mind that next week is still a broken week, which usually leads to slightly lower prices, therefor some expect cream prices to further increase over the next weeks. Weather forecasts are good so the expected demand for fresh products remains good as well.

Butter: UP, UPPER, UPST

The butter market is reaction as we know it best, extreme! Prices on futures are trending much higher as Q3 prices traded as high as € 6350 (last deal we heard) and Q4 € 6450. Physical trades did not go up this high, but we did manage to trade Irish butter for Q3 at € 6200 and we hear German butter for July traded as high as € 6300. We must admit that it is hard to find buyers willing to go up this high, although it's equally hard to find sellers to offer anything to be honest.

We still see the biggest pressure in May/June where some sellers are still willing to discuss sales. Q3 + Q4 sales seem nearly impossible to do as sellers are impossible to find. If cream finds another leg higher, its our expectation to find higher trades for the days ahead.

We see more and more end users coming to the market, trying to lock in offers, but offers seem to disappear quicker than the milk on the spot market. We start the day with a small market

• a seller for 4 trucks Polish Lactic for May at € 6050 FCA Poland
• a seller for 5 trucks of Irish Lactic for June at € 6175 FCA Ireland
• a seller for 3 trucks of NL/DE/BE fresh/frozen for Q3 at € 6400

Cheese: Butter Bulls are scaring sellers

The bullish sentiment did not yet affect the cheese market as far as we can see it, but the bullish sentiment on butter is causing sellers to pull any offer they were willing to discuss. For cheese, the main focus seems to be on Q3 and Q4 from our buyer's side, activity for May/June seems low.

Our vision on the entire dairy complex is bullish, so in our analysis, there is little reason for cheese prices to trade sideways. Looking at the reports we get, demand for cheese is robust and production has done the same. But is butter is pulling as hard as it did today on the milk, cheese prices need to follow to keep production interesting.

We still only have buyers for the following

• a buyer for Gouda for Q3 for 9 trucks at € 3850
• a buyer for Edam for Q3 for 9 trucks at € 3800
• a buyer for 9 trucks of Mozzarella for Q3 at € 3600 (german)
• a buyer for 12 trucks of cheddar curd for H2 at € 4050 DAP NL

Powder: What Are Buyers Waiting For?

The bearish product in a bullish dairy world, how much longer can the price stay down? That is the question most partners we speak to have. As said in previous reports, the supply fundament is quite bullish, but its the demand side that isn't. But looking at everything we know, we also wonder, what are buyers waiting for?

The price has already held up at the same price range for a long time, the EU is past its peak, it will still take a few months before NZ comes back with volumes to the market. With low stocks and declining milk volumes, the risk of prices shooting up is much bigger than the risk of the market dropping a few cents below the current market price. It seems the risk/reward ratio not to buy is small, while the risk/reward ratio to buy is so much bigger.

We have sellers for

• 200mt of SMP medium heat, EMMI origin at € 2300 for July
• 150mt of SMP medium heat, Belgium Origin at € 2400 for July
• 150mt of SMP medium heat, Irish origin at € 2275 for May/June
• 200mt of SMP non standardized, EU15+Polish at € 2400 FCA NL