The Return of Buyer

The demand-supply balance hangs as milk output appears to be overwhelming the current demand, potentially leading to a market shake-up in the coming weeks. Recent data from the US show milk collections up by over 4% for July, while the EU, particularly France and Germany, reports notable increases—3.9% and 2.6% respectively. Yet, it remains unclear how this milk will be channeled given the increased production of commodities such as butter and SMP.

The variability in weather conditions further complicates predictions, as dry spells in the UK and Ireland contrast the extreme heat in southern Europe. Meanwhile, producers are ramping up production, with Germany showing a 10% boost in butter output and a striking 25% in SMP. Many anticipate that this trend could culminate in an all-time high for EU commodity production by the year's end.

While logistical struggles remain with international trade, the EU is notably better supplied than last year, setting the stage for possibly significant market corrections. With producers and buyers poised on either side, the market appears on the brink of either a resurgence or further retrenchment. Butter prices have taken a step down, resting at €6685 for Q4 and €6600 for Q1, indicative of €150 less than the previous week.