Euronext started trading butter and SMP futures on Monday. Both contracts settle on the Vesper Price Index for EU butter and SMP, which makes the curve a live read on where the market expects butter prices to go over the coming months. You do not have to trade futures to get something out of that.
The launch landed in a data-heavy week. Milk production in the EU, New Zealand and the US all came in close to expectations, which points to good availability across the three main exporting regions. US farms produced 2.6% more milk in September than a year earlier, and most of the extra came from more cows rather than more milk per cow. New Zealand collected 1.9% more milk solids, its highest September in at least five years, though growth there is slowing from the 6% to 8% pace of June and July.
Cheese stood out on the CME spot call again, with blocks up another 4.3% on the week and barrels catching up. Seasonal demand was only part of it. Two cheddar recalls turned out to be a major driver of the recent swing, which says more about how fast a spot market reprices than about the fundamentals, which have not changed. The SMP market was calmer, with US powder still priced well above European and New Zealand product.
Read the full US dairy market analysis here.
