Last week was, let’s call it, a “balanced” one for the dairy markets.
Prices for most commodities moved sideways or saw minor corrections—nothing to write home about. With a stable GDT outcome, a relatively uneventful Gulfood, and no major surprises (yet) from the ONIL tender, it seems many market participants took their foot off the gas and coasted into the weekend. Looking ahead, we struggle to see any compelling reason for a different outcome in the coming week. Those in search of volatility and excitement might want to turn to the currency markets—or perhaps trade some Bitcoin—because the dairy market appears quite content to keep its cool and maintain its sideways trend.
Looking back, most commodities indeed traded sideways. Cream prices showed some early weakness but, in true dairy fashion, quickly regained momentum and ended the week slightly higher. Western EU cream prices closed just above €8,000 per metric ton. Butter prices also edged up—at least in terms of offers. Q2 butter changed hands a few times at €6,800, and € 6825 but as soon as sellers nudged their offers up to €6,900, buyers conveniently disappeared. Notably, February and March contracts continue to trade at a slight premium over Q2, suggesting that near-term supply remains tight. While our fundamental outlook on butter remains bearish, the price curve insists on painting a more bullish scenario.
The cheese market experienced a slight dip, with Q2 Mozzarella slipping toward €4,000 and Gouda dipping just below €4,250. However, good luck finding sellers below those levels—buyers quickly returned to the market, pushing prices right back to where they started. GDT Mozzarella prices mirrored this minor weakness, though it would be a stretch to call it significant. Near-term cheese supply also remains tight, and securing spot loads continues to be a challenge.
The powder market is supposedly weak, yet every attempt to push prices lower meets strong resistance. Codex SMP just below €2,400 and non-standardized SMP under €2,500 seem like attractive numbers for buyers, but finding willing sellers is another story. Meanwhile, buyers are anything but scarce. Forward curves indicate that this support isn’t vanishing anytime soon. Early signals from the ONIL tender suggest that prices are likely to remain stuck in this sideways range for the foreseeable future. Once we have final results, we’ll share them in our next update.
So, here we are: a relatively balanced market. Butter has been in a steady €100-per-metric-ton-per-week decline, and after stabilizing for one week even that has started to feel—dare we say—bullish. But make no mistake, supply-side offers remain plentiful, while buyer support at lower levels isn’t lacking either. The same can be said for SMP and cheese, where both upside and downside seem capped in the short term. Ultimately, market direction will hinge on supply developments.
A bullish scenario could materialize if supply constraints emerge—whether from high input costs or the lingering effects of Bluetongue (or, for our U.S. friends, the ongoing bird flu situation). However, if the impact of Bluetongue proves to be less severe than last year, we could see an influx of milk thanks to the generous farmgate prices currently being paid across the EU.
And, of course, let’s not forget the external factors. Currency volatility continues to have a major influence on market pricing. The Polish Zloty’s recent strength has made EU exports from Poland notably less competitive. Meanwhile, the unpredictable U.S. dollar adds another layer of uncertainty, potentially affecting both exports and imports. And then, we have geopolitics—always a wildcard. The U.S. president is juggling an attempt to end two wars (Gaza and Ukraine) while seemingly eager to start a new trade war with some of America’s closest allies.
So, what’s the outlook? More sideways price movement in the coming weeks—assuming, of course, that the world stage doesn’t throw us any unexpected curveballs. But in this market, you never really know.
You can now read the most important #news on #eDairyNews #Whatsapp channels!!!
🇺🇸 eDairy News INGLÊS: https://whatsapp.com/channel/0029VaKsjzGDTkJyIN6hcP1K
