126th edition of Foodcom DAIRY Newsletter

Ramadan started on the first of April and Easter starts on April 17. So, it’s safe to say that all the purchases have already been made with these holidays in mind. What can we expect in the coming days?

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SMP

Demand for SMP worldwide continues to outstrip supply in most producing regions. As milk production has struggled for months, buyers would like to secure volumes for the future. Sellers appear to be reducing risk and are reluctant to sell futures, leaving mainly spot activity and higher prices.

FCMP

Demand for FCMP is increasing. Constantly rising fats prices have an impact on FCMP costs. Price increases are due to low supply and high demand, as well as steadily increasing prices for production costs, especially feed/fertilizer and energy costs.

SWP

Dairy markets continue to show signs of a bull market due to low production of most dairy products in Europe. The lack of available milk (and thus dairy commodities) has caused producers to have to renegotiate contracts with buyers, leaving irregular customers without coverage. This means that SWP prices are likely to remain high and buyers will not have coverage for future items.

Butter

The outlook for butter is increasingly short-term, as the most activity is seen in the spot market across all producing regions. As demand is strong and supply shows no signs of improving, we are likely to see tight markets in the coming weeks.

Cheese

With most of the action in Europe taking place in a very tight and sentiment-dependent cash market, the cheddar market is likely to see more price rises in the near future. Since the gouda production forecasts are not very optimistic and most of the trade is only in the very tight spot market, our forecast for the European gouda market remains optimistic. Over the next few weeks, sellers are likely to slowly start offering volumes for May, while many buyers will be looking for cheese.

Liquids

In general, all liquids started last week with high prices, but the closer to Friday the prices of cream and concentrate started to fall. This is a normal situation before Easter due to lower production and a small break for the holidays. Milk is still below last year’s level and in some countries there will be a milk peak and milk will become scarce. SMC could be bought for 3400 EUR/MT and cream for 8600 EUR/MT.