It keeps pressing arm on cheese market

Buyers have been scanning the market all year long. The high prices form an obstacle to long-term hedging, which means that trading often takes place via short-term contracts. Until now, demand has always picked up after a sluggish period.

We are currently in such a low demand period, where buyers and sellers are competing against each other. Demand is expected to pick up again when the market has found a bottom. It is difficult to indicate where that point is. The DCA quotations for Gouda and Edam have fallen to below €5.200 per tonne. It should be noted that prices are currently lower, but still above the limit of €5.000 per tonne. Insiders think this is a reasonably solid bottom, although buyer pressure is building up.

Supplies still tight for the time being
Still, due to the tight supplies, sellers have good cards in their hands. Monthly production volumes have remained below 80.000 tons since June, meaning surpluses will not appear anytime soon. Moreover, it will take until mid-November before cheese production starts to increase again. Until then, the milk supply will remain in seasonal decline. The idea is that delivery volumes will only increase again in January. This means that the market will be solid in the coming months, provided a drop in demand is not an issue. The latter is a concern for producers. After all, inflation puts the purchasing power of consumers to the test. Rabobank reported earlier this week that consumption figures in the German retail channel are under pressure. However, the higher milk prices at FrieslandCampina and Arla for October are a signal that producers are not worried. 

Buyers and sellers are likely to continue to squeeze in the coming months, with the market going up and down in small waves. This was also the case during the summer months. In the generally weak first quarter of the new year, the negotiating position of buyers appears to be improving. It hasn't gotten that far yet.