My oh my, prices can move fast within the dairy industry. Over the last few days, mostly focused around Tuesday, the first of October, we have seen all four seasons of a year of dairy trading in a very short time. We have witnessed very high offers followed by low offers. We went from many to no bids, ending today with only very low bids. It’s a true rollercoaster!

The most dramatic price swings were seen in butter, but also the cheese market has received its share of volatility. On this occasion, weekly prices do not do justice to the massive price swings we have experienced over the past few days. The price development of EEX futures already gives a slightly better view, see Figure below.

The sentiment in the European market for gouda turned very quickly on the back of decreasing
butter prices, with prices falling especially on Tuesday this week. Prices moved up and down quite rapidly over the past two days, which ultimately led to the large spread between buyers and sellers that we see today.

Traders are the most active currently, as manufacturers and cheese processors are either
without significant stock pressure or are hesitant to step into today’s market. Many buyers have covered their Q4 needs, with only some month-to-month business that still needs to be done for November and/or December.

While most of the changes initiated on the futures market, physical prices quickly dropped, too – This week’s Vesper Price Index (02/10/2024) decreased to €4850 | $5370/mt ($2.44/lb) EXW. Based on today’s milk price of roughly €0.53/kg, gouda prices are still on the higher side, meaning that production is profitable and a good stream of income for manufacturers.

Even though we would label the market for gouda as stable to slightly bullish due to the lower availability, prices are expected to remain volatile as liquidity is low and the spread between buyers and sellers is a couple of hundred euros by now. How that will play out in the coming week will become clear soon. The long-term outlook however is becoming clearer, with additional production expected to drive prices lower than current levels. Overall, prices for Q1 next year have already dropped, as increased milk production is anticipated, leading to higher gouda availability compared to today.

For a complete outlook for more cheeses and butter, visit Vesper for free.